Raven (RAVN) To Report Q1 Earnings: What's In The Cards?

Raven Industries, Inc. (NASDAQ:RAVN) is scheduled to report first-quarter fiscal 2019 results after market close on May 17. In fourth-quarter fiscal 2018, the company’s earnings came in at 24 cents per share, showing a miss of 22.6%. Notably, Raven has pulled off an average positive earnings surprise of 20.2% in the trailing four quarters, beating estimates three times.

Let’s see how things are shaping up for this announcement.

Key Factors at Play

Raven is likely to benefit from its focus on technological advancements, new product introduction and business opportunities. In applied technology, the company is increasing market share through technological advancements. Through sustained funding of key R&D projects over the last few years, the company is introducing products that are getting favorable customer feedback and generating strong demand. This is expected to continue into fiscal 2019.

Meanwhile, the company’s new product introductions continued to gain traction, particularly through original equipment manufacturer (OEM) channel. Over the last several years, Raven has developed its next-generation rate control technology. The company remains optimistic about the market opportunity for its core technology.

Furthermore, the company’s Aerostar segment seems to be consistently growing across many of its platforms, including stratospheric balloons, radar systems and aerostats. In fact, the pipeline of high-quality business opportunities for the division has improved significantly. Also, the company is developing new stratospheric balloon solutions for other new customers. Notably, Raven’s strong pipeline augers well for solid sales in 2019.

However, with persistently low U.S. corn prices and the forecast for lower agricultural equipment sales volume through the rest of the year, Raven believes that the U.S. agricultural market will remain challenging.

Further, margin pressures remain a significant concern for the company. Moreover, foreign exchange volatility and increased competition are likely to hurt growth.

Earnings Whispers

Our proven model does not conclusively show an earnings beat for Raven in the to-be-reported 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. But that is not the case here as you will see below.

Zacks ESP: Raven has an Earnings ESP of 0.00%, as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 50 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company carries a Zacks Rank #3, which increases the predictive power of the ESP. However, its ESP of 0.00% makes surprise prediction difficult.

We caution against stocks with a Zacks Ranks #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

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:

Delek US Holdings, Inc. (NYSE:DK) has an Earnings ESP of +1.24% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Rayonier Inc. (NYSE:RYN) has an Earnings ESP of +9.59% and a Zacks Rank of 2.

ITT Inc. (NYSE:ITT) has an Earnings ESP of +0.21% and a Zacks Rank #3.

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