Ball Corporation (BLL) to Post Q3 Earnings: What Lies Ahead?

Ball CorporationBLL is scheduled to report third-quarter 2018 results on Nov 1, before the opening bell.

In the last reported quarter, the company's adjusted earnings came in line with the Zacks Consensus Estimate. Notably, Ball Corporation's earnings outpaced estimates in two out of the trailing four quarters, with an average positive beat of 3.66%.

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

Ball Corporation Price and EPS Surprise

Ball Corporation Price and EPS Surprise | Ball Corporation Quote

Factors at Play

Ball Corporation's third-quarter results will benefit from the Ball Metalpack joint venture (JV). The company closed the sale of its U.S. steel food and steel aerosol packaging assets, and formed the JV in July 2018. Ball Corporation will report financial results of its 49% ownership of the JV in the third quarter within consolidated statements of earnings. Moreover, the transaction will be beneficial for Ball Corporation's aerospace business.

Further, Ball Corporation's North American segment is expected to benefit in the to-be-reported quarter from a more favorable volume trend, and a moderation of start-up costs and out-of-pattern freight. The segment's results will also gain from fixed cost savings.

However, Ball Corporation's results will be hurt by continued decline in domestic beer consumption in the quarter. Changing consumer preferences in the United States has led to domestic mass beer declines, which is likely to unfavorably impact the company's North American segment's performance.

Furthermore, Ball Corporation anticipates tougher year-over-year comparisons in second-half 2018 for the Brazilian business, due to the lack of profit recorded on the INS manufacturing contract in 2017.

Moreover, the company's performance will be marred by volatile volumes in the Europe, Middle East and Africa (EMEA) beverage can business. The company will also face a tight supply-and-demand situation in the global aluminum aerosol business.

The Zacks Consensus Estimates for Ball Corporation's earnings per share is pegged at 60 cents for the Jul-Sep quarter, up around 15% year over year. However, the Zacks Consensus Estimate for total sales of $2.8 billion for the quarter indicates a 4.5% decline from the prior-year quarter.

Coming to segments, we expect net sales for Ball Corporation's Beverage packaging, South America segment to be around $408 million, reflecting a decline of around 4% year over year. Our consensus estimates indicate that sales in the Beverage packaging, Europe segment will reach $677 million in the third quarter, reflecting year-over-year growth of 4%.

The Zacks Consensus Estimate indicates that Ball Corporation's Food and Aerosol Packaging segment's revenues will reach $250 million in the to-be-reported quarter, reflecting a year-over-year drop of about 22%.

Earnings Whispers

Our proven model does not conclusively show that Ball Corporation is likely to beat on 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 at least 3 (Hold) for this to happen. This is not the case here as you will see below:

Earnings ESP: The Earnings ESP, which represents the difference between the Most Accurate Estimate of 59 cents and the Zacks Consensus Estimate of 60 cents, is -1.01%. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks Rank: Ball Corporation currently carries a Zacks Rank of 3. While this increases the predictive power of ESP, we also need to have a positive ESP to be confident about an earnings surprise.

It should be noted 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.

Share Price Performance

Ball Corporation's shares have outperformed the industry over the past year. The stock has gained around 2% as against the 9% loss recorded by the industry during the same time frame.

Stocks Worth a Look

Here are a few stocks worth considering as these have the right combination of elements to post an earnings beat this quarter.

CF Industries Holdings, Inc. CF has an Earnings ESP of +36.36% and flaunts a Zacks Rank #1. The company's shares have been up 19% in the past year. You can see the complete list of today's Zacks #1 Rank stocks here .

Tetra Tech, Inc. TTEK has an Earnings ESP of +0.96% and carries a Zacks Rank #2. Its shares have gained 35% in the past year.

Axon Enterprise, Inc AAXN has an Earnings ESP of +33.33% and a Zacks Rank #3. The stock has surged 149% in a year's time.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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