Pentair (PNR) to Report Q3 Earnings: What's in the Offing?

Pentair plc PNR is slated to report third-quarter 2019 results on Oct 23, before the opening bell. Notably, the company surpassed the Zacks Consensus Estimate in three of the trailing four quarters, with the average positive earnings surprise history being 2.52%.

Which Way Are Estimates Treading?

The Zacks Consensus Estimate for third-quarter revenues is pegged at $718 million, indicating an improvement of 0.97% from the year-ago quarter. The same for earnings stands at 55 cents, suggesting growth of 1.85% from the prior-year reported figure.

The Zacks Consensus Estimate for the third quarter’s earnings has remained unchanged in the past 30 days.

Pentair plc Price and EPS Surprise


Pentair plc Price and EPS Surprise

Pentair plc price-eps-surprise | Pentair plc Quote

Shares of the company have gained 2% in a year, against the industry’s growth of 20.4%.

Will the upcoming earnings release provide a boost to Pentair’s stock? Let’s take a look.

Factors to Influence Q3 Results

Pentair’s distributors had accelerated spending in the fourth quarter of 2018, in anticipation of price increases. However, wet and cold weather delayed pool construction activity in several of Pentair’s key markets, impacting demand for Pentair so far in 2019. As a result of slower sell-through, inventory levels have built up, which is likely to have impacted the third-quarter revenues. 

Unfavorable weather in the United States significantly delayed the planting season, which in turn is likely to have impacted the sale of its agriculture sprayer products. Farmers have also been delaying equipment purchases owing to the continued trade uncertainty and lower commodity prices during the quarter to be reported. Pentair’s third-quarter revenues are anticipated to reflect these headwinds. However, recent acquisitions are likely to have contributed to growth.

Further, inflation in material and other costs, which include the impact of tariffs, is likely to get reflected in the company’s performance and consequently the bottom line in the third quarter. Notably, Pentair has undergone certain business restructuring initiatives aimed at reducing fixed cost structure, which is likely to have negated the impact of higher raw material costs on the third-quarter results. Further, productivity improvement and price hikes implemented to combat higher input costs are also likely to have contributed to third-quarter margin improvement.

Pentair’s projects third-quarter 2019 adjusted earnings per share guidance at 54-56 cents. The company had reported adjusted earnings per share of 57 cents in the third quarter of 2018. Per the company, sales in the quarter were anticipated to be flat to up 2% on a reported basis and approximately down 1% to 3% on a core basis compared with the prior-year quarter.

What do Estimates for the Segments Indicate?

The Zacks Consensus Estimate for the Aquatic Systems segment’s revenues is currently pegged at $212 million, suggesting a decline of 9% year over year. The segment’s operating profit for the quarter is projected to fall 10% year over year to $54 million.

The Zacks Consensus Estimate for the Filtration Solutions segment’s revenues is $270 million, which indicates an improvement of 12% from the prior-year quarter. The consensus estimate for the segment’s operating profit is at $44 million for the third quarter, suggesting growth of 15% from the $38 million reported a year ago.

The Zacks Consensus Estimate for the Flow Technologies segment’s revenues is pegged at $238 million for the quarter to be reported, flat compared with the year-ago quarter. The segment is expected to report an operating income of $39 million in the quarter, a projected growth of 7% from the prior-year quarter.

Earnings Whispers

Our proven model doesn’t conclusively predict an earnings beat for Pentair this time around.. This is because a stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Pentair’s Earnings ESP is -2.14%.

Zacks Rank: Pentair currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks Poised to Beat Earnings Estimates

Here are a few Industrial Products stocks which you may consider as our model shows that these have the right combination of elements to post an earnings beat in their upcoming releases.

John Bean Technologies Corporation JBT has an Earnings ESP of +0.55% and a Zacks Rank of 3.

Sealed Air Corporation SEE has a Zacks Rank #3 and an Earnings ESP of +2.40%.

W.W. Grainger GWW, a Zacks Ranked #3 stock, has an Earnings ESP of +0.53%.

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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.

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