Will Ball Corporation (BLL) Pull A Surprise In Q2 Earnings?

Beverage can maker Ball Corporation (NYSE:BLL) is scheduled to report second-quarter 2016 results before the opening bell on Aug 4. In the last-reported quarter, the company reported a year over year decline both in earnings and sales.

Let’s see how things are shaping up for this quarter.

Why a Likely Positive Surprise?

Our proven model shows that Ball Corporation is likely to beat earnings because it has the right combination of two key ingredients.

Zacks ESP: Earnings ESP for the company stands at +1.01% as the Most Accurate estimate is pegged at $1.00 while the Zacks Consensus Estimate is lower at 99 cents. Positive ESP is a meaningful and leading indicator of a likely earnings surprise.

Zacks Rank: Ball Corporation carries a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating earnings estimates.

Conversely, the Sell-rated stocks (Zacks Rank #4 and 5) should not be considered going into an earnings announcement.

The combination of Ball Corporation’ Zacks Rank #3 and a positive ESP makes us confident of an earnings beat in the upcoming report.

Surprise History

Ball Corporation outpaced the Zacks Consensus Estimate in two out of the trailing four quarters. The average positive surprise was 0.66%. In the last-reported quarter, the company posted a negative earnings surprise of 14.49%.

Factors to Consider

Ball Corporation remains optimistic about demand for metal aerosol containers and related investments made in late 2015 that will provide momentum through the remainder of 2016. The company posted contracted backlog of $100 million at the end of the first quarter, higher than year-end 2015. The aerospace segment’s backlog was $729 million, with even more opportunities for growth during second-quarter 2016.

The addition of new customers at the new aluminum impact extruded aerosol facility in India; increasing efficiency in its new contour bottle line at Conroe, TX, and new tin plate aerosol technology in Chestnut Hill, TN, will augment growth.

Further, the industry demand for specialty cans across Europe continues to grow and industry supply/demand remains balanced. Ball Corporation also expects to benefit from increasing EVA dollar generation and multiple growth capital projects. Moreover, the company will gain from acquisitions, focus on cost optimization and robust backlog.

Stocks That Warrant a Look

Here are some stocks you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:

AO Smith Corp. (NYSE:AOS) has an Earnings ESP of +2.22% and a Zacks Rank #2.

Deere & Company (NYSE:DE) has an Earnings ESP of +9.47% and a Zacks Rank #3.

Forbes Energy Services Ltd. (NASDAQ:FES) has an Earnings ESP of +6.17% and a Zacks Rank #3.