Pentair (PNR) To Post Q4 Earnings: What's In The Offing?

Pentair plc (NYSE:PNR) is scheduled to report fourth-quarter 2017 results before the opening bell on Jan 30. The company’s results for the quarter are anticipated to benefit from strong performance of the Filtration & Process business. However, results might bear the impact of hurricanes.

Last quarter, the company’s adjusted earnings surpassed the Zacks Consensus Estimate by more than 2%. Notably, Pentair’s earnings have surpassed estimates in three out of the trailing four quarters, with an average positive earnings surprise of 3.89%.

Let’s see how things are shaping up for Q4 earnings.

Pentair PLC. Price and EPS Surprise

Pentair PLC. Price and EPS Surprise | Pentair PLC. Quote

Factors at Play

Pentair guided that adjusted EPS for the fourth quarter will be 93 cents, reflecting an increase of around 19% from fourth-quarter 2016. The company projects revenues to be $1.24 billion, up around 4% on a reported basis, and 1% on a core basis, compared to the fourth-quarter 2016 revenues.

Notably, Pentair estimates full-year 2017 adjusted EPS to be $3.53 and revenues to be roughly $4.9 billion. In the Filtration & Process business, the company continues to witness strength in the residential and commercial sector, and especially in food service. However, the company expects that headwinds in the energy and infrastructure businesses might impact the quarterly performance.

Pentair’s Aquatic Systems business will bear the brunt of the impact of hurricanes in the fourth quarter. Although material inflation remains a headwind, the company continues to drive productivity and pricing actions to help mitigate this impact.

Our consensus estimates indicate that segment income of Pentair’s Water Quality segment will reach $134 million in the to-be-reported quarter, relecting an year over year growth of 11.7%. The Zacks Consensus Estimate for segment income for the Electrical segment is pegged at $116 million for the quarter, representing an year over year improvement of 12.4%.

The company’s price performance has not been impressive. Its shares have gained 21.5% in a year’s time, underperforming 30.3% growth recorded by the industry it belongs to.

Earnings Whispers

Our proven model shows that Pentair is likely to beat 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 at least 3 (Hold) for this to happen.

Zacks ESP: The Earnings ESP for Pentair is +0.31%. This is because the Most Accurate estimate of 94 cents comes in higher than the Zacks Consensus Estimate of 93 cents. A favorable Earnings ESP serves as a meaningful and leading indicator of a likely positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Pentair currently carries a Zacks Rank #3. It should be noted that stocks with a Zacks Rank #1, 2 or 3 have a significantly higher chance of beating earnings.

Conversely, stocks with a Zacks Rank #4 or 5 (Sell rated) should never be considered going into an earnings announcement.

The combination of Pentair’s Zacks Rank #3 and Earnings ESP of +0.31% makes us confident of a likely earnings beat.

Stocks to Consider

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

iRobot Corporation (NASDAQ:IRBT) , with an Earnings ESP of +17.65% and a Zacks Rank #1. Its shares have gained 4.3%, over the past six months. You can see the complete list of today’s Zacks #1 Rank stocks here.

Deere & Company (NYSE:DE) , with an Earnings ESP of +3.29% and a Zacks Rank #1. The company’s shares have been up 31.8% during the same time frame.

Briggs & Stratton Corporation (NYSE:BGG) , with an Earnings ESP of +10.29% and a Zacks Rank #1. The stock has gained 10.6% in six months’ time.

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