Factors Setting The Tone For Hillenbrand (HI) In Q2 Earnings

Hillenbrand, Inc. (NYSE:HI) is slated to release second-quarter fiscal 2018 results on May 3. The company has been delivering positive earnings surprises for seven straight quarters now, buoyed by a flourishing Process Equipment business. However, headwinds in the Batesville unit have been a worry.

With these factors in mind, let’s see how things are shaping up prior to the quarterly announcement.

Factors Likely to Impact Q2

Hillenbrand has been witnessing year-over-year growth in the top and the bottom line for more than a year. Well, the company has been gaining from strength in the Process Equipment segment. The segment has been delivering impressive results on the back of higher demand for screening and separating equipment as well as plastics projects. Incidentally, during first-quarter fiscal 2018, revenues in this segment jumped 19% year over year to reach $264 million

Further, the company has been focusing on capitalizing the opportunities provided by the process equipment market by investing in enhanced expertise and engineering solutions, to cater to consumer more effectively. Indeed, such upsides have been fueling investors’ optimism in the stock, which surged 27% in the past year compared with the industry’s rise of 5.7%.

We expect that strength in the Process Equipment segment will continue to drive Hillenbrand’s performance in the impeding quarter. Currently, the Zacks Consensus Estimate for earnings for the second quarter is pegged at 60 cents, depicting an increase of 13.2% from the year-ago quarter’s figure. This estimate has been stable over the last 30 days. Moreover, analysts polled by Zacks expect revenues of $417 million, reflecting a rise of almost 5.5% from the year-ago quarter’s figure.

On the flip side, Hillenbrand has long been struggling with its Batesville business segment, thanks to lower burial volumes, as consumers depict a radical shift toward cremation. Evidently, in the first quarter of fiscal 2018, segment revenues fell 1% to $133 million. Moreover, performance in this segment remains challenged with higher commodity and fuel costs. Management expects these hurdles to linger and hurt revenues as well as margins in second-quarter fiscal 2018, which is a concern. Nevertheless, we expect the Process Equipment unit to sufficiently cushion Hillenbrand in countering the headwinds in the Batesville segment.

Hillenbrand Inc Price, Consensus and EPS Surprise

All said, let take a look at the picture unveiled by the Zacks Model for the upcoming quarterly release.

Zacks Model

Our proven model does not show that Hillenbrand is likely to beat bottom-line estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Though Hillenbrand carries a Zacks Rank #3, its Earnings ESP of 0.00% makes surprise prediction difficult.

Stocks With Favorable Combination

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

Pilgrim's Pride Corporation (NASDAQ:PPC) has an Earnings ESP of +4.67% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Church & Dwight Co., Inc. (NYSE:CHD) , a Zacks Rank #3 stock, has an Earnings ESP of +0.52%.

Estee Lauder (NYSE:EL) , a Zacks Rank #3 company, has an Earnings ESP of +0.67%.

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