The Q3 earnings season is in full swing, with results from 58.2% of the S&P 500 Index members already out (as on Oct 28). Earnings of these 291 members (accounting for 68.5% of the index's total market capitalization) are up 2.2% on 1.3% higher revenues.
After five consecutive quarters of earnings declines for the S&P 500 index, we are finally seeing a marginally positive overall growth trend for the index. On the whole, our latest data projects that the earnings for S&P 500 companies are now on track to grow 2% from the year-ago period on 1.4% higher revenues. This is comparable to a decline of 2.9%, expected a few weeks ago. (For more details, read our latest Earnings Preview article).
Further, the encouraging growth angle is being supplemented by a higher number of positive surprises compared to the recent quarters. In fact, 73.5% of the companies who have reported results have surpassed earnings estimates, with 57.4% coming ahead of revenue estimates. If this trend continues, it will likely paint a recovering growth picture for the times to come.
The industrial products sector is one of the sectors expected to chart positive earnings growth this quarter. Its earnings are on track to grow 5.9% in the quarter, on 0.7% lower sales compared with the last year.
Let's have a look at how some players within the sector, like Emerson Electric Co. EMR , Eaton Corporation plc ETN , MSC Industrial Direct Co. Inc. MSM and G&K Services Inc. GK are poised ahead of their scheduled announcements on Nov 1.
Emerson Electric: This company is engaged principally in the design, manufacture and sale of a broad range of electrical, electromechanical and electronic products and systems. It delivers products and services to industrial, commercial, and consumer markets globally.
The company has recorded a dull earnings beat history over the trailing four quarters, with two beats for as many misses. The company has posted a modest average positive surprise of 1.4% over the trailing four quarters. Last quarter, it had missed estimates by 4.8%.
Our proven model does not conclusively show that Emerson Electric is likely to beat on earnings in the to-be-reported quarter. (Read More: Emerson's Q4 Earnings: What's in Store for the Stock ?)
Emerson Electric presently has an Earnings ESP of 0.00% and a Zacks Rank #3 (Hold). The Zacks Consensus Estimate for the quarter is pegged at 89 cents. Despite a favorable rank, the company's 0.00% Earnings ESP makes surprise prediction inconclusive. Note that stocks with a Zacks Rank #1 (Strong Buy), or 2 (Buy) or 3 have a significantly higher chance of beating estimates.
Please check our Earnings ESP Filter that enables you find stocks that are expected to come out with earnings surprises.
EMERSON ELEC CO Price and EPS Surprise
Eaton Corporation: This industrial company operates as a power management company worldwide and serves the Agriculture and Forestry, Aviation, Community Infrastructure, Construction, Data Centers, Energy, Government & Military, Healthcare, Manufacturing & Industrial, Residential and Vehicles markets.
The company has recorded a modest surprise history over the trailing four quarters,with two misses, along with two in-line earnings. Eaton Corporation has an average positive surprise of 2.7% over the trailing four quarters. Last quarter, it had reported in-line earnings.
Our proven model does not conclusively show that Eaton Corporation is likely to beat on earnings in the to-be-reported quarter. The company has an Earnings ESP of -1.75% and a Zacks Rank #4 (Sell). The Zacks Consensus Estimate for the quarter is pegged at $1.14.
Note that we caution against stocks with Zacks Rank #4 or #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
EATON CORP PLC Price and EPS Surprise
MSC Industrial: This companymarkets and distributes various ranges of metalworking and maintenance, repair, and operations products primarily in the U.S.
MSC Industrial has had a decent earnings history in recent times, with three consecutive earnings beats over the four trailing quarters, for an average positive surprise of 2.2%. Last quarter, it had beat estimates by 5%.
Our proven model does not conclusively show that MSC Industrial is likely to beat on earnings in the quarter. The company has an Earnings ESP of -2.04% and a Zacks Rank #3. The Zacks Consensus Estimate for the quarter is pegged at 98 cents. Despite a favorable rank, the company's negative Earnings ESP makes surprise prediction inconclusive. You can see the complete list of today's Zacks #1 Rank stocks here.
MSC INDL DIRECT Price and EPS Surprise
G&K Services: This company provides branded uniform and facility services programs in the U.S. and Canada. The company has recorded a decent surprise history over the trailing four quarters, having beaten estimates thrice. The stock has an average positive surprise of 3.7% over the trailing four quarters. Last quarter, it had beat estimates by 5.3%.
Our proven model does not conclusively show that G&K Services is likely to beat on earnings in the quarter to be reported. The company has an Earnings ESP of +3.33% and a Zacks Rank #4. Despite having a positive Earnings ESP, the company's Zacks Rank #4 makes surprise prediction inconclusive. The Zacks Consensus Estimate for the quarter is pegged at 90 cents.
G&K SVCS A Price and EPS Surprise
Keep an eye on our full earnings articles to see how these players finally fared in the quarter.
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