Machinery Stocks' Earnings To Watch On Jul 29: B, GRC, GHM

We believe that financial performance of U.S.-based industrial products stocks are highly correlated to the economic conditions as well as industrial production of the country. In the Apr–Jun quarter, the country’s industrial output fell roughly 1% year over year. On a macro front, these stocks faced headwinds from unfavorable foreign currency movements and weak economic conditions in some developed and developing nations. However, the impacts of such adversities are believed to have ebbed compared with the first quarter.

According to the Zacks Industry classification, the machinery industry is broadly grouped under Industrial Products, one of the 16 broad Zacks sectors.

As of Jul 27, roughly 42.9% of industrial products stocks in the S&P 500 Group reported results for the Apr–Jun quarter, recording a 2.3% decline in earnings and 5.3% fall in revenue. The prevalent macro headwinds are likely to negatively impact results for the Industrial Products sector. Earnings in the quarter are predicted to decline 5.6% while revenue will likely fall 5.8%.

What’s in Store for 3 Machinery Stocks, B, GRC and GHM?

Below we discuss briefly the expectations from the upcoming results (Apr–Jun quarter) for three machinery stocks:

Barnes Group Inc. (NYSE:B) : This machinery company is slated to release its second-quarter 2016 results on Jul 29, before the market opens. In the trailing four quarters, the company delivered better-than-expected results in one, lagged in two and posted in-line results in the other. Average earnings surprise was a negative 2.66%.

Our proven model does not conclusively show that Barnes Group will be able to pull a surprise this quarter. This is because the company lacks the right combination of two key ingredients – a positive Earnings ESP (the percentage difference between the Most Accurate estimate and the Zacks Consensus Estimate) and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold). The company currently carries a Zacks Rank #3 and a 0.00% ESP. Over the last 60 days, the Zacks Consensus Estimate for the stock remained unchanged at 59 cents for second-quarter 2016. (For more please read: Barnes Group to Report Q2 Earnings: What to Expect?)

Gorman-Rupp Co. (NYSE:GRC) : This machinery stock is anticipated to release its second-quarter 2016 results on Jul 29. The company reported better-than-expected results in two of the four trailing quarters while lagged in the rest. Average earnings surprise was a negative 1.89%.

Our proven model does not conclusively show that Gorman-Rupp will beat earnings this quarter because it currently carries a Zacks Rank #3 and a 0.00% Earnings ESP. The Zacks Consensus Estimate for the stock is currently pegged at 22 cents for second-quarter 2016.

Graham Corporation (NYSE:GHM) : The machinery company is gearing up to release its first-quarter fiscal 2017 (ended Jun 2016) results on Jul 29, before the market opens. The company reported better-than-expected results in two of the four trailing quarters, lagged in one and recorded in-line results in the other. Average earnings surprise was a negative 0.80%.

Our proven model does not conclusively show that Graham Corporation will beat earnings this quarter because it currently carries a Zacks Rank #4 (Sell) and a 0.00% Earnings ESP. The Zacks Consensus Estimate for the stock has decreased 40% to 3 cents.