Harsco (HSC) to Report Q3 Earnings: What's in the Offing?

Harsco CorporationHSC is scheduled to report third-quarter 2018 results on Oct 31, before the opening bell.

Notably, Harsco has an impressive record of positive earnings surprises, as it hasn't missed the Zacks Consensus Estimate in any of the last four quarters, delivering an average surprise of 17.80%. In the last reported quarter, the company posted a positive earnings surprise of 2.9%.

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

Harsco Corporation Price and EPS Surprise

Harsco Corporation Price and EPS Surprise | Harsco Corporation Quote

Factors at Play

Harsco expects operating income of $50-$55 million in the third quarter, reflecting 35% year-over-year growth. Also, its earnings per share are projected to increase to 34-40 cents compared with 20 cents in the prior-year quarter. The company anticipates to report improved profitability in each segment in the third quarter compared to prior-year quarter.

The Zacks Consensus Estimate for Harsco's earnings per share for the third quarter is pegged at 37 cents, reflecting year-over-year growth of around 85%. The Zacks Consensus Estimate for total sales of $448 million also indicates nearly 16% growth from the prior-year quarter.

Harsco's third-quarter results are expected to benefit from strong bookings and backlog. The company witnessed growth in customer bookings and backlog in second-quarter 2018. Orders increased more than 20% year over year in the last quarter. Its largest wins in the quarter were an equipment order with the U.S. Metro and a relatively larger equipment sale in Southeast Asia.

Notably, its Rail segment's earnings will increase significantly from the prior-year quarter, backed by higher contributions from aftermarket services, Protran products and other equipments. Harsco expects its Metals & Minerals segment to benefit from higher service levels and applied products contributions, as well as new contracts. Further, its Industrial segment results are anticipated to increase from the prior-year quarter, driven by stellar demand.

However, Harsco's results will be partially offset by delay in shipments and negative impact of foreign exchange.

The company's shares have underperformed the industry 's performance in the past year. The stock has appreciated 15% compared with 16% growth recorded by the industry during the same time frame.

Earnings Whispers

Our proven model does not conclusively show that Harsco 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: Harsco has an Earnings ESP of 0.00%. That is because the Most Accurate Estimate and the Zacks Consensus Estimate are both pegged at 37 cents. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks Rank: Harsco currently sports a Zacks Rank #1. 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.

Other Key Picks

Here are some other companies that you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this quarter:

Tetra Tech, Inc. TTEK has an Earnings ESP of +0.96% and flaunts a Zacks Rank #1. Its shares have gained 35% in the past year. You can see the complete list of today's Zacks #1 Rank stocks here .

CF Industries Holdings, Inc. CF has an Earnings ESP of +36.36% and carries a Zacks Rank #1. The company's shares have been up 19% 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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