Machinery Stocks' Earnings Queued For Apr 27: PH, AOS & MCRN

We have entered into the heart of the Q1 earnings season, with nearly 800 companies reporting their numbers this week, including 191 S&P 500 members. A clearer picture of the earnings season is expected to emerge by the end of this week, as we cross the halfway mark in the Q1 reporting cycle for the S&P 500 index.

As on Apr 21, we have results from 95 S&P 500 members, accounting for 24.9% of the index’s total market capitalization, combined. Total earnings of these companies are up 14.3% year over year, on 4.6% higher revenues. (For more details, read our latest Earnings Preview article).

Of the companies that have reported results, 72.6% surpassed earnings estimates, with 62.1% coming ahead of revenue estimates. Clearly, growth has been steadily accelerating compared to the preceding quarter and is actually on pace to reach its highest level in nearly three years.

In fact, our latest data projects that the earnings for the S&P 500 companies are now on track to grow an impressive 9.1% from the year-ago period, on 6% higher revenues. This is comparable to earnings growth of 7.4% recorded in fourth-quarter 2016 on 4.8% higher revenues.

The Industrial Products space is one of the sectors expected to chart positive earnings growth this quarter. Its earnings are on track to be up 7.9% in the quarter, on 7.9% higher sales compared with the last year.

Industrial machinery companies have been strong performers since the election of Trump in the U.S. Positive outlook on U.S. infrastructure spending and a recovering Chinese economy will likely lend a boost to a number of machinery stocks this quarter.

Let’s have a look at how some machinery companies within the sector, like Parker-Hannifin Corporation (NYSE:PH) , A.O. Smith Corporation (NYSE:AOS) and Milacron Holdings Corp. (NYSE:MCRN) are poised, ahead of their scheduled announcements tomorrow.

Parker Hannifin is a leading worldwide full-line manufacturer of motion control products, including fluid power systems, electro-mechanical controls and related components. The company has an impressive earnings surprise history, having beaten estimates each time in the trailing four quarters, for an average positive surprise of 12.4%. In the last reported quarter, the company surpassed estimates by 36.4%.

Our quantitative model hints at an earnings beat for this Zacks Rank #1 (Strong Buy) company in Q1. This is because it has an Earnings ESP of +0.54% (the Most Accurate estimate of $1.87 being higher than the Zacks Consensus Estimate of $1.86), in addition to the favorable Zacks Rank. (For more details, read: Is Parker-Hannifin Set for Another Earnings Beat in Q3?)

For a possible earnings beat, the company should have the right combination of two key ingredients – a positive Earnings ESP and a Zacks Rank #1, #2 (Buy) or #3 (Hold). Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Parker-Hannifin Corporation Price and EPS Surprise

Similarly, we expect Milacron Holdings to outperform estimates when it reports quarterly results tomorrow. The company manufactures, distributes and services engineered and customized systems within the plastic technology and processing industry. The company has a modest earnings history, having beaten estimates strongly in two of the trailing four quarters for one miss, with an average positive surprise of 9.2%. In the last reported quarter, the company exceeded earnings estimates by 34.3%.

A favorable rank and positive Earnings ESP hint toward an earnings beat this season for the company. For the to-be-reported quarter, the company’s Earnings ESP of +3.13% and a favorable Zacks Rank #3 indicate that Milacron Holdings’ earnings will likely beat estimates this quarter. Its Most Accurate estimate of 33 cents is higher than the Zacks Consensus Estimate of 32 cents. (Read More: Milacron to Report Q1 Earnings: A Beat in Store?)

Milacron Holdings Corp. Price and EPS Surprise

A.O. Smith is a diversified manufacturer serving customers worldwide. A.O. Smith, too, has a striking earnings beat history, having surpassed estimates each time in the trailing four quarters, for an average positive surprise of 5.3%. In the last reported quarter, the company beat estimates by 2.2%.

We do not expect A.O. Smith to beat expectations this quarter. Though the company’s Zacks Rank #2 increases the predictive power of ESP, its Earnings ESP of 0.00% makes surprise prediction difficult. The Zacks Consensus Estimate for the quarter is pegged at 47 cents. You can see the complete list of today’s Zacks #1 Rank stocks here.

Smith (A.O.) Corporation Price and EPS Surprise

Keep an eye on our full earnings articles to see how these players finally fared in quarter.

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