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What to Expect from Astec Industries' (ASTE) Q3 Earnings?

Astec Industries, Inc.ASTE , manufacturer and marketer of road building equipment, is slated to report third-quarter fiscal 2016 results on Oct 20.

Last quarter, the company posted a huge negative surprise of 80.49%. Moreover, Astec missed the Zacks Consensus Estimate in two of the trailing four quarters with an average negative surprise of 21.45%.

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

Factors to Consider

Astec has seen slower backlog activity during the first and second quarters of 2015. Astec's total backlog decreased 6% to $291 million as of Mar 31, 2015 and 13% to $229.5 million as of Jun 30, 2015. The declines were mainly due to slump in International backlog impacted by strengthening of the U.S. dollar against other currencies and the global economic slowdown.

The company remains concerned about currency challenges which might have hurt its backlog in the third quarter. Astec's performance is also prone to political uncertainty and weakening global mining sector.

On the flipside, acquisitions remain a key piece of Astec's growth strategy along with organic growth and targeted sales growth efforts, both in the U.S. and international markets. The company is also likely to benefit from investment in increasing capacity, introduction of new products and restructuring actions.

Astec witnessed improvement in Wood Pellet Plant coating activity during the second quarter. The company is poised to benefit from growth opportunities in the pellet plants in the third quarter. Further, optimism surrounding the federal highway bill in the U.S. also remains a key growth driver.

Earnings Whispers

Our proven model shows that Astec is not likely to beat estimates this quarter. 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. Unfortunately, this is not the case here as elaborated below.

Zacks ESP: Astec's Earnings ESP is currently pegged at -26.09%. This is because the Most Accurate Estimate of 17 cents is lower than the Zacks Consensus Estimate of 23 cents.

Zacks Rank: Astec's Zacks Rank #3 when combined with a negative ESP makes surprise prediction difficult. We caution against stocks with a Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks That Warrant a Look

Here are some companies you may want to consider 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.

Ball Corporation BLL has an earnings ESP of +2.11% and holds a Zacks Rank #3.

HD Supply Holdings, Inc. HDS with an Earnings ESP of +4.55% and a Zacks Rank #2.

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ASTEC INDS INC (ASTE): Free Stock Analysis Report

HD SUPPLY HLDGS (HDS): 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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