Pentair (PNR) Q3 Earnings: Disappointment In The Cards?

Pentair plc (NYSE:PNR) is scheduled to report third-quarter 2016 results on Oct 25, before the market opens. In the last reported quarter, the company’s adjusted earnings and sales both improved year over year, outperforming the respective Zacks Consensus Estimates. Let’s see how things are shaping up prior to this announcement.

Earnings Whispers

Our proven model does not conclusively show that Pentair is likely to beat earnings 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. Unfortunately, that is not the case here as elaborated below:

Zacks ESP: Pentair currently has an Earnings ESP of 0.00%. This is because the Most Accurate estimate stands at 73 cents per share, in line with the Zacks Consensus Estimate.

Zacks Rank: Pentair carries a Zacks Rank #5 (Strong Sell) which combined with an earnings ESP of 0.00% makes an earnings beat unlikely. As it is, the Zacks #4 or 5 (Sell-rated stocks) should never be considered going into an earnings announcement.

Surprise History

Pentair outpaced the Zacks Consensus Estimate in each of the trailing four quarters, with an average positive surprise of 4.58%. In the last reported quarter, the company posted a positive earnings surprise of 0.91%.

PENTAIR PLC Price and EPS Surprise

Factors to Consider

For the third quarter, Pentair expects earnings per share in the range of $1.02–$1.08. Earnings will be up approximately 8% year over year on an adjusted basis. Revenues are projected at around $1.66 billion, up around 7% on a reported basis and flat on a core basis compared to third-quarter 2015 revenues.

Pentair experienced fall in project orders in both industrial and energy businesses in first-half 2016 and anticipates these headwinds to prevail. Further, a strong U.S dollar and weak agricultural market will hurt results.

Meanwhile, Pentair is aggressively managing its cost structure and bolstering productivity to work through near-term challenges. Additionally, it is investing in its high-performing Technical Solutions and Water Quality Systems segments in which it sees strategic organic and inorganic growth opportunities.

Stocks That Warrant a Look

Here are some stocks in the industrial products sector that you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:

Casella Waste Systems Inc. (NASDAQ:CWST) has an Earnings ESP of +60.00% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

NN Inc. (NASDAQ:NNBR) has an Earnings ESP of +4.35% and also sports a Zacks Rank #1.

Ball Corp. (NYSE:BLL) carries a Zacks Rank #2 and has an Earnings ESP of 5.43%.

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