Building products manufacturer
Lennox International, Inc.
) is set to report third-quarter 2013 results before the opening
bell on Oct 21. In the last reported quarter, it delivered 10.1%
positive earnings surprise. Let's see how things are shaping up
for this announcement.
Factors to Consider
In the second quarter of 2013, Lennox posted impressive
results with earnings per share of $1.31 increasing 33.7% year
over year. The increase in earnings was mainly due to favorable
margins and healthy growth in revenues. Total revenue in second
quarter grew 8.7% year over year to $913.1 million as a result of
better volumes and price/mix.
The new construction as well as Lennox's replacement
businesses are performing well and are expected to continue their
growth momentum. The company continues to have a strong foothold
in South America and Asia Pacific, although the European market
still makes us cautious.
Based on the past performance, management expects earnings per
share for full year 2013 in the range of $3.45-$3.75,
significantly up from previous projections of $3.25-$3.55. Core
sales for 2013 are expected to grow 6%-8%, compared with previous
projections of 3%-6% range.
Our proven model does not conclusively show that Lennox is
likely to beat earnings this quarter. That is because a stock
needs to have both a positive
and a Zacks Rank of #1, #2 or #3 for this to happen. That is not
the case here as we see below.
Negative Zacks ESP:
The Expected Surprise Prediction or ESP for Lennox is -2.38%
since the Most Accurate Estimate stands at $1.23 per share, while
the Zacks Consensus Estimate is higher at $1.26.
Lennox's Zacks Rank #4 (Sell) when combined with a negative ESP
lowers the possibility of a positive surprise prediction. We
caution against stocks with Zacks Rank #4 and #5 (Sell-rated
stocks) going into the earnings announcement, especially when the
company is seeing negative estimate revisions momentum.
Other Stocks to Consider
Other stocks in the broader machinery sector that have both a
positive earnings ESP and a favorable Zacks Rank are:
Honeywell International Inc.
), with Earnings ESP of +0.81% and a Zacks Rank #2 (Buy).
Power Solutions International
), with Earnings ESP of +4.55% and a Zacks Rank #3 (Hold).
Generac Holdings Inc.
), with Earnings ESP of +2.41% and a Zacks Rank #3 (Hold).
GENERAC HOLDING (GNRC): Free Stock Analysis
HONEYWELL INTL (HON): Free Stock Analysis
LENNOX INTL INC (LII): Free Stock Analysis
POWER SOL INTL (PSIX): Free Stock Analysis
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