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Can MRC Global (MRC) Pull Off a Surprise in Q4 Earnings?

We expect MRC Global Inc.MRC to beat expectations when it reports fourth-quarter and full-year 2016 (ended Dec 30, 2016) results after the market closes on Feb 16.

Why a Likely Positive Surprise?

Our proven model shows that MRC Global has the right combination of two key ingredients.

Zacks ESP: MRC Global has an Earnings ESP of +45.46%, as the Most Accurate estimate is pegged at a loss of 6 cents, while the Zacks Consensus Estimate is pegged at a loss of 11 cents.

You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks Rank: MRC Global's Zacks Rank #3 (Hold), when combined with a positive ESP, predicts the possibility of a beat. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

Note that we caution against Sell-rated stocks (Zacks Rank #4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Existing Scenario

Over the last one month, MRC Global's shares yielded a return of 1.21%, as against the loss of 2.76% recorded by the Zacks classified Steel Pipe & tubes industry.

MRC Global anticipates reporting stronger revenues in the quarter to be reported, on the back of new innovations, superior customer relationships and diligent marketing programs. In addition, the company's fresh business deals are likely to boost top-line performance in the quarter under review. For instance, the Enterprise Distributor Program (EDP) agreement signed in Oct 2016, with Cameron International, is expected to reinforce the company's ongoing multi-year strategy. Through this program, MRC Global aims to generate more than 40% of its revenues from automation, valves, instrumentation and measurement products. By the end of 2017, the business is estimated to generate a positive revenue impact of $125-$150 million for MRC Global.

Also, bottom-line results are expected to improve in the upcoming quarters on the back of higher revenues and greater operational discipline.

Furthermore, MRC Global is committed toward its shareholders and tries to provide greater value to them through lucrative dividend and share buyback offers. For instance, in Nov 2016, the company sanctioned an increment in its ongoing share buyback program for common stock to $125 million from $100 million sanctioned in Nov 2015. The revised share repurchase program will expire on Dec 31, 2017.

Over the last 60 days, the Zacks Consensus Estimate for the stock has been revised upward for 2017, reflecting positive market sentiments toward the stock.

MRC Global Inc. Price and EPS Surprise

MRC Global Inc. Price and EPS Surprise | MRC Global Inc. Quote

Stocks to Consider

Here are some stocks within the industry that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:

Fairmount Santrol Holdings Inc. FMSA , with an Earnings ESP of +11.11%, and a Zacks Rank #2 (Buy).

Illinois Tool Works Inc. ITW , with an Earnings ESP of +0.69%, and a Zacks Rank #2.

Caterpillar Inc. CAT , with an Earnings ESP of +1.85%, and a Zacks Rank #3.

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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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