We expect industrial goods manufacturer
Precision Castparts Corp.
) to beat earnings expectations when it reports first quarter
fiscal 2013 results on Jul 25.
Why a Likely Positive Surprise?
Our indigenous Zacks methodology shows that Precision is
likely to beat earnings with the right combination of two key
Positive Zacks ESP:
Earnings Surprise Prediction or ESP, which represents the
difference between the Most Accurate Estimate and the Zacks
Consensus Estimate, is currently pegged at 0.35% for Precision.
This implies a likely positive earnings surprise for the
Zacks Rank #2 (Buy):
Stocks with Zacks Ranks of #1, #2 and #3 have a significantly
higher probability of beating earnings. The Sell-rated stocks (#4
and #5) should never be considered going into an earnings
With a Zacks Rank #2 (Buy) and an ESP of 0.35%, Precision is
strong contender for earnings beat this quarter.
What is Driving the Better than Expected Earnings?
Shares of this leading manufacturer of complex metal
components and products have been steadily riding high and
attained multiple 52-week new highs in the last one year.
Precision is experiencing significant growth in its Aerospace
and Forged segment in 2013. In addition, demand in industrial gas
turbine (IGT) looks encouraging. The company will likely benefit
from the growing demand of Boeing 787, as it is one primary
supplier of engine components and raw materials for 787s . The
company is continually focusing on expanding its product lines
Furthermore, Precision has a proven track record of increasing
market share through acquisitions and developing new growth
opportunities. The company completed eight acquisitions in fiscal
2012. Moving forward, the company is expected to benefit from the
strong free cash flow and enormous funds available to boost its
organic and inorganic growth.
Given management's stellar acquisition track record, new
product line and robust free cash flow generation, investors can
look forward to improved results in the first quarter of fiscal
Other Stocks to Consider
Precision is not the only firm looking up this earnings
season. We also see likely earnings beats coming from these three
industry peers as well:
AO Smith Corp.
)Earnings ESP of +2.33% and a Zacks Rank #2 (Buy)
Gardner Denver Inc.
) Earnings ESP of +3.18% and a Zacks Rank #2 (Buy)
) Earnings ESP of +2.13% and a Zacks Rank #2 (Buy).
SMITH (AO) CORP (AOS): Free Stock Analysis
GARDNER DENVER (GDI): Free Stock Analysis
LINDSAY CORP (LNN): Free Stock Analysis
PRECISION CASTP (PCP): Free Stock Analysis
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