The coronavirus-stricken second-quarter 2020 earnings season is replete with disappointing consensus estimates. Yet a handful of industrial product developers with a favorable Zacks Rank are poised to beat earnings estimates. Five of these are slated to release results next week.
Industrial Product Sector in Q2
The Federal Reserve reported that industrial production climbed 5.4% in June compared with 1.4% in May. Notably, industrial production tumbled 12.5% in April and 4.4% in March. Despite a jump in the metric in June, it remained 10.9% below its pre-pandemic level in February. Moreover, industrial production plunged 42.6% year over year in the second quarter, marking the largest quarterly decline since the World War II.
In the second quarter, industrial activities were way below last year since lockdowns continued till the third week of May. Moreover, a second wave of COVID-19 in some states since the second half of June has forced them to delay reopening of the industrial sector. The resurgence significantly stifled a section of economists and financial experts' expectations of a V-shaped recovery of the U.S. economy.
Disappointing Expectations for Second-Quarter Earnings
As of Jul 16, 39 S&P 500 members reported second-quarter 2020 earnings results. Total earnings of these companies are down 47.8% from the same period last year on 2.2% lower revenues. Of the total, 74.4% surpassed EPS estimates and 64.1% outpaced revenue estimates.
Overall, second-quarter earnings for the S&P 500 Index are projected to be down 44.9% year over year on 10.5% lower revenues. Notably, first-quarter earnings of companies on the S&P 500 Index were down 13.5% on 1.4% higher revenues.
5 Industrial Product Companies Set to Beat Earnings Estimates
We have narrowed down our search to five industrial product stocks slated to release earnings results next week. Each of these stocks carries a Zacks Rank #2 (Buy) and has a positive Earnings ESP. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Our research shows that for stocks with the combination of a Zacks Rank #3 or better and a positive Earnings ESP, the chance of an earnings beat is as high as 70%. These stocks are expected to soar after earnings release. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
The chart below shows the price performance of our five picks in the last quarter.
Graphic Packaging Holding Co. GPK provides paper-based packaging solutions to food, beverage, foodservice and other consumer products companies. It operates through three segments: Paperboard Mills, Americas Paperboard Packaging, and Europe Paperboard Packaging. The Zacks Rank # 2 company has an Earnings ESP of +4.00%.
The company has an expected earnings growth rate of 10.3% for the current year. The Zacks Consensus Estimate for the current year has improved by 4.3% over the last 90 days. It has a trailing four-quarter earnings surprise of 9.6%, on average. The company is set to release earnings results on Jul 21, before the opening bell.
Dover Corp. DOV is an industrial conglomerate producing a wide range of specialized industrial products and manufacturing equipment worldwide. The Zacks Rank # 2 company has an Earnings ESP of +4.40%.
The Zacks Consensus Estimate for Dover's current-year earnings has improved 0.4% over the last 30 days. It has a trailing four-quarter earnings surprise of 7.1%, on average. The company is set to release earnings results on Jul 22, before the opening bell.
Cintas Corp. CTAS provides corporate identity uniforms and related business services primarily in North America, Latin America, Europe, and Asia. It operates through Uniform Rental and Facility Services and First Aid and Safety Services segments. The Zacks Rank # 2 company has an Earnings ESP of +14.43% for the fourth quarter of fiscal 2020.
The Zacks Consensus Estimate for Cintas' current-year earnings has improved 0.4% over the last 60 days. It has a trailing four-quarter earnings surprise of 5.3%, on average. The company is set to release earnings results on Jul 23, before the opening bell.
Allegion plc. ALLE is a leading global provider of security products and solutions for business and domestic purposes. It manufactures and sells mechanical and electronic security products and solutions worldwide. The Zacks Rank # 2 company has an Earnings ESP of +2.27%.
The Zacks Consensus Estimate for Allegion's current-year earnings has improved 0.8% over the last 60 days. It has a trailing four-quarter earnings surprise of 5.3%, on average. The company is set to release earnings results on Jul 23, before the opening bell.
Reliance Steel & Aluminum Co. RS is a leading metals service center company engaged in value-added materials management and metals processing services. It distributes over 100,000 metal products to more than 125,000 customers across a vast spectrum of industries. The Zacks Rank # 2 company has an Earnings ESP of +62.50%.
It has a trailing four-quarter earnings surprise of 21.2%, on average. The company is set to release earnings results on Jul 23, before the opening bell.
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