What's In Store For Ingersoll (IR) This Earnings Season?

Industrial goods manufacturer Ingersoll-Rand Plc (NYSE:IR) is scheduled to report first-quarter 2017 results before the opening bell on Apr 26. In the last reported quarter, the company’s adjusted earnings missed the Zacks Consensus Estimate by 8 cents. However, Ingersoll has a healthy earnings surprise history. In the trailing four quarters, it topped earnings estimates thrice with an average positive earnings surprise of 10.5%.

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

Key Factors in the Quarter

Ingersoll expects to reap continued synergistic benefits from the product, channel, and service investments made over the past five to seven years. The company continues to anticipate healthy revenue contributions from the HVAC (heating, ventilation, and air conditioning) and transport refrigeration business units as well as from the compression technology business unit. At the same time, it envisions significant contributions from its Internet of Things platform through connected buildings, intelligent monitoring of service, diagnostic and self-healing systems, and consumer marketing and fulfillment efforts.

The company’s strategic acquisitions are also likely to serve as growth drivers, supplementing organic growth. During the quarter, Ingersoll acquired Thermocold Costruzioni S.r.l, a privately held Italian firm manufacturing HVAC systems and solutions for customers in Europe. The transaction will enable the company to better serve its existing clients while attracting newer ones to augment its revenues. In addition, Ingersoll is likely to achieve steady improvements in operating profitability with a strong commitment to new product developments, investments in IT platform and expansion of channel services footprint and product management capabilities.

Although Ingersoll’s portfolio repositioning efforts to focus on high-barrier markets are encouraging, they involve upfront cost and will lead to earnings dilution in the near term. Consequently, the company is continually under stress to maintain profitability through stringent cost-cutting measures. Additionally, the company’s international operations are subject to foreign currency risks with the strengthening of the U.S. dollar. These factors are likely to lead to lower earnings in the to-be-reported quarter.

Earnings Whispers

Our proven model does not conclusively show that Ingersoll is likely to beat earnings this quarter as it does not possess the key components. 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. This is not the case here as you will see below:

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate of 48 cents and Zacks Consensus Estimate of 53 cents, is -9.43%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Ingersoll-Rand PLC (Ireland) Price and EPS Surprise

Ingersoll-Rand PLC (Ireland) Price and EPS Surprise | Ingersoll-Rand PLC (Ireland) Quote

Zacks Rank: Ingersoll’s Zacks Rank #2 when combined with a negative ESP makes an earnings beat unlikely this quarter.

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.

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:

Panera Bread Company (NASDAQ:PNRA) has an Earnings ESP of +1.09% and a Zacks Rank #3.

Pinnacle Foods Inc. (NYSE:PF) , with an Earnings ESP of +2.17% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Treehouse Foods, Inc. (NYSE:THS) , with an Earnings ESP of +4.62% and a Zacks Rank #2.

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