Will Ingersoll-Rand (IR) Surpass Q2 Earnings Estimates?

Industrial goods manufacturer Ingersoll-Rand Plc (NYSE:IR) is scheduled to report second-quarter 2016 results before the opening bell on Jul 27. In the last reported quarter, earnings beat the Zacks Consensus Estimate by 13 cents. Ingersoll has a fairly decent earnings surprise history. In the trailing four quarters, the company has managed to beat earnings estimates thrice with an average positive earnings surprise of 9.52%.

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

Key Factors in the Past Quarter

Ingersoll has a solid foundation of global brands and leading market share in all major product lines. The geographic and product diversity coupled with a large installed product base provides ample growth opportunities within service, spare parts and replacement revenue streams. Additionally, the company’s complementary portfolio of products and services is likely to assist in strengthening its market position and achieving high productivity.

Also, the company’s strategic acquisitions would serve as growth drivers, supplementing organic growth. Furthermore, Ingersoll is likely to achieve steady improvements in operating profitability with a strong commitment to fund new product developments, investing in IT platform and building its channel services footprint and product management capabilities.

During the quarter, Ingersoll launched IQV20 W5132 3/8” Impactool – a powerful cordless 3/8” impact tool. This new tool delivers up to 50% more torque in comparison to other cordless 3/8” impact wrench. The rise in demand for such innovative product services is likely to augment its overall revenues going forward.

In the to-be-reported quarter, adjusted earnings from continuing operations are expected to be in the range of $1.27 to $1.32 per share, with reported earnings in the range of $2.75 to $2.80.

Earnings Whispers

Our proven model conclusively shows that Ingersoll is likely to beat earnings this quarter as it possesses the two key components. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for a successful earnings beat. This is perfectly the case here as you will see below:

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is currently at +0.77%.

Zacks Rank: Ingersoll’s Zacks Rank #2 when combined with a positive ESP makes us confident of a likely positive earnings surprise.

On the other hand, the Sell-rated stocks (#4 and #5) should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Other Stocks to Consider

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

Bristol-Myers Squibb Company (NYSE:BMY) , earnings ESP of +1.49% and a Zacks Rank #1.

CalAtlantic Group, Inc. (NYSE:CAA) , earnings ESP of +9.21% and a Zacks Rank #1.

Innoviva, Inc. (NASDAQ:INVA) , earnings ESP of +25.00% and a Zacks Rank #1.