Joy Global Inc
) will release its fiscal third quarter 2013 financial results
before the market bell on Aug 28, 2013. In the prior quarter,
this surface and underground mining equipment manufacturer
reported a positive earnings surprise of 11.61%. Joy Global
currently has a Zacks Rank #4 (Sell). Let's see how things are
shaping up at Joy Global prior to this announcement.
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Factors to Consider This Quarter
The fortunes of mining equipment manufacturers are primarily tied
to the development and activities of the miners. Miners are
presently taking a very cautious step in developing new mines and
are selecting projects which can achieve returns without a
material improvement in market demand.
The cut in capital expenditure of the miners has resulted in a
nearly 35% decline in original equipment bookings. Moreover,
prices and margins of the mining equipment suppliers are under
pressure as the commodities are in supply surplus.
A major chunk of Joy Global's revenue comes from its top 10
customers. In the last fiscal year this group contributed nearly
38% of its total revenue. The loss of any of these customers
would affect the top line of the company.
On the positive side, the global demand for coal is expected to
move up due to the addition of nearly 90 gigawatts of coal-based
power generation plants in 2013. Miners will have to produce more
coal to meet the surge in demand once the stockpiles are cleared.
This might benefit mining equipment manufacturers like Joy
Our proven model indicates that Joy Global is likely to miss
earnings this quarter. That is because a stock needs to have both
a positive earnings Expected Surprise Prediction or ESP (Read:
Zacks Earnings ESP: A Better Method
) and a Zacks Rank #1, 2 or 3 for this to happen. This is not the
Negative Zacks ESP
: Earnings ESP, which represents the difference between the Most
Accurate estimate and the Zacks Consensus Estimate, is at -5.80%.
acks Rank #4 (Sell)
: Joy Global's Zacks Rank #4 further increases the possibility of
a negative earnings surprise. We caution against stocks with
Zacks Ranks #4 and 5 (Sell rated stocks) going into the earnings
announcement, especially when the company is seeing negative
Other Stocks to Consider
Here are some companies tied to the mining industry worth
considering on the basis of our model, which shows that they have
the right combination of elements to post an earnings beat in the
Suncoke Energy Partners, L.P.
) has earnings ESP of +2.08% and carries a Zacks Rank #2 (Buy).
Alpha Natural Resources, Inc.
) has earnings ESP of +4.00% and carries a Zacks Rank #3 (Hold).
Arch Coal Inc.
) has earnings ESP of +6.45% and carries a Zacks Rank #3