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Proto Labs (PRLB) to Report Q3 Earnings: What to Expect?

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Proto Labs, Inc.PRLB is scheduled to report third-quarter 2015 results on Oct 22, before the market opens. The Zacks Consensus Estimate for the quarter is pegged at 49 cents per share.

For the trailing four quarters, Proto Labs reported better-than-expected results in two quarters, while underperforming in the rest. Average earnings surprise was positive 0.2%. Last quarter, the company's earnings of 46 cents per share surpassed the Zacks Consensus Estimate of 44 cents by 4.6%. Let us see how things are shaping up for Proto Labs this quarter.

Factors to Influence Q3 Results

Macroeconomic headwinds, characterized by a weak global economic outlook and soft commodity prices, continue to cloud the near- to medium-term outlook of industrial stocks. In the U.S., industrial production declined 0.2% in September and 0.1% in August, while an increase of 0.8% was recorded in July. In the preceding quarter, industrial production fell 1.4% year over year. Also, export demand in the country suffered from unfavorable foreign currency movements.

We believe such uncertainties might have impacted the demand for Proto Labs' custom parts which are used for prototyping as well as in short-run production. Also, the company is exposed to risks arising from forex losses and stiff competition from other prototype manufacturers.

However, we believe Proto Labs' efficient management and marketing team, with a unique ability to develop custom-made products, will prove beneficial, going forward. Also, the company's inorganic initiatives will enhance its revenue-generation capabilities.

Earnings Whispers

Our proven model does not conclusively show that Proto Labs is likely to beat earnings this quarter. That 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. That is not the case here as you will see below.

Zacks ESP: Expected Surprise Prediction or ESP of Proto Labs is currently 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate stand at 49 cents per share.

Zacks Rank: Proto Labs currently carries a Zacks Rank #3. This rank, when combined with a 0.00% ESP, makes surprise predictions difficult.

We caution against stocks with a Zacks Rank #4 or #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing a negative estimate revision momentum.

Stocks to Consider

Here are some companies in the sector that you may want to consider instead as our model shows they have the right combination of elements to post an earnings beat this quarter:

ABB Ltd. ABB , with an Earnings ESP of +3.57% and a Zacks Rank #3.

Xylem Inc. XYL , with an Earnings ESP of +2.08% and a Zacks Rank #3.

Sealed Air Corporation SEE , with an Earnings ESP of +1.75% and a Zacks Rank #3.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days . Click to get this free report >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

SEALED AIR CORP (SEE): Free Stock Analysis Report

ABB LTD-ADR (ABB): Free Stock Analysis Report

XYLEM INC (XYL): Free Stock Analysis Report

PROTO LABS INC (PRLB): Free Stock Analysis Report

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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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