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Will New Products Support Milacron's (MCRN) Q2 Earnings?

Milacron Holdings Corp.MCRN is slated to report second-quarter 2018 results before the market opens on Jul 26.

In the last reported quarter, the company posted a positive earnings surprise of nearly 2.6%. Notably, Milacron surpassed the Zacks Consensus Estimate in each of the trailing four quarters, coming up with an average positive surprise of 10.01%.

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

Milacron Holdings Corp. Price and EPS Surprise

Milacron Holdings Corp. Price and EPS Surprise | Milacron Holdings Corp. Quote

Key Factors to Consider

Milacron's second-quarter performance will mainly reflect the favorable impact of its focus on geographic expansion of certain product lines, continued penetration of hot runners, and incremental share gain from new products. Further, the company's performance will display benefits from its efforts to capture more of customers' spending on consumable products through Milacron's lifecycle sales approach.

The company has successfully rolled out products in various trade shows year to date which will support new order books, stoking sales growth for the quarter to be reported. In the NPE trade show this year, Milacron displayed its latest product offerings, highlighted by the new Mold-Masters sequential electric valve gates; The Fusion G2 hot runner system for large parts to include automotive applications; and Milacron's M Powered IoT and aftermarket solutions. The company also participated in the Chinaplas 2018 trade show in China featuring its injection molding-machine portfolio and extrusion systems.

Milacron's backlog increased around 12% year over year in first-quarter 2018. Its entire backlog is expected to be filled within the next 12 months, the impact of which will be reflected in the second quarter revenues. In addition, its margin will gain from organizational redesign and cost-reduction initiatives. Moreover, the company expects that its profitability will be supported by revenue growth and margin expansion in the near term.

The Zacks Consensus Estimate for Milacron's earnings per share is pegged at 48 cents for the second quarter, underlining year-over-year growth of roughly 4%. The Zacks Consensus Estimate for total sales of $322 million also indicates nearly 4% growth from the prior-year quarter.

The company's Fluids segment will grow on elevated demand for technology fluids, driven by environmental and health concerns, and increasing prevalence of exotic metals. We expect quarterly sales for the segment will likely be $31.8 million, up around 4% year over year.

However, imposition of tariffs on steel prices will impact Milacron's margin principally in the Advanced Plastic Processing Technologies (APPT) segment. The Zacks Consensus Estimate for the segment sales is pegged at $173 million for the second quarter, reflecting 4% year-over-year improvement.

Our consensus estimates indicate that sales of Milacron's Melt Delivery and Control Systems (MDCS) segment will reach $118 million in the to-be-reported quarter, indicating 3.6% year-over-year decline. The segment will remain fairly stable sequentially, though the timing of results might be difficult to predict as the business is fairly short cycle, and customer deferrals are likely to increase if uncertainty regarding the business cycle mounts.

Milacron's shares have underperformed the industry it belongs to over the past year, affected by the prevalent headwinds. The stock has gained around 5% compared to nearly 12% growth recorded by the industry.

Zacks Rank & Key Picks

Milacron carries a Zacks Rank #3 (Hold).

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

Terex Corporation TEX , with an Earnings ESP of +0.05% and a Zacks Rank #2 (Buy). The stock has gained 11% in a year's time. You can see the complete list of today's Zacks #1 (Strong Buy) Rank stocks here .

Emerson Electric Co. EMR , with an Earnings ESP of +0.15% and a Zacks Rank #2. Its shares have rallied 13% in the past year.

Columbus McKinnon Corporation CMCO , with an Earnings ESP of +4.20% and a Zacks Rank #3. The company's shares have been up 66% over the past year.

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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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