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Will Joy Global (JOY) Disappoint Earnings Estimates in Q4?

Joy Global Inc . JOY will release its fiscal fourth-quarter 2015 financial results before the market opens on Dec 16, 2015. In the last quarter, this mining equipment maker reported a negative earnings surprise of 10.0%. Let's see how things are shaping up for the company prior to this announcement.

Factors to Consider this Quarter

The highly competitive mining space and softness in demand are forcing miners to take a cautious approach on new projects. In addition, miners are temporarily shutting down mines, slowing the pace of mining activities and delaying expansion plans to cope with a weak recovery pace. These are likely to have a negative impact on mining equipment demand.

Joy Global depends on its thermal and metallurgical coal customers to generate a major portion of its revenues. The World Steel Association projects that the global steel demand will decrease by 1.7% to 1,513 Mt in 2015. This implies a lower-than-expected demand for met coal.

Adding to the woes, the U.S. Environmental Protection Agency has introduced its Clean Power Plan. The primary objective of this plan is to cut emissions from existing coal-fired power plants by 32% over the 2005 to 2030 time frame. This will not only have an adverse impact on coal miners but will also affect equipment makers.

Earnings Whispers

Our proven model shows that Joy Global is unlikely to beat on 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. This is not the case here, as shown below.

Zacks ESP : The company has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 42 cents.

Zacks Rank : Joy Global has a Zacks Rank #5 (Strong Sell), which lowers the predictive power of ESP. We particularly caution against Sell-rated stocks (Zacks Rank #4 and 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some companies worth considering as our model shows that they have the right combination of elements to post an earnings beat this quarter.

Deere & Company DE has an earnings ESP of +1.45% and carries a Zacks Rank #3.

Reliance Steel & Aluminum Co. RS has an earnings ESP of +4.71% and carries a Zacks Rank #3.

Illinois Tool Works Inc. ITW has an earnings ESP of +0.83% and carries a Zacks Rank #3.

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DEERE & CO (DE): Free Stock Analysis Report

RELIANCE STEEL (RS): Free Stock Analysis Report

ILL TOOL WORKS (ITW): Free Stock Analysis Report

JOY GLOBAL INC (JOY): 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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