Industrial Stock Earnings in Early February: AVY, JCI & More

This earnings season is heading toward positive growth for second consecutive quarter after five quarters of back-to-back declines. Of the 170 S&P 500 members that have reported across all sectors, that constitute 46.3% of the index’s total market capitalization, earnings has gone up 6% for the fourth quarter. (Read more: Earnings Growth Returns, Will it Continue?)

Combining the actual results from the still-to-report 330 companies, total earnings of the index is expected to grow 5.2% year over year on 4.0% higher revenues. This quarter, 11 of the 16 sectors are expected to log positive growth. The industrial products sector is one such sector, with a projected growth of 1.4% for the fourth quarter on the back of a 4.1% rise in revenues driven by increased capital investment in the infrastructure market.

Looking at the earnings growth of 4.5% put up on the scoreboard by 31.8% of the companies (39.4% of the total market capitalization) that have reported in the sector, it is on track to achieve the projected numbers.

It will be interesting to see how some of the industrial stocks fare when they release their quarterly results in early February. Apart from beats and misses, focus will also be on their outlook.

Avery Dennison Corporation AVY is a producer of pressure-sensitive adhesives and materials, is expected to release fourth-quarter 2016 results around Feb 1, 2017. In the third quarter, the company’s top-line and bottom-line both improved year over year, beating the Zacks Consensus Estimate on both counts.

Avery Dennison Corporation Price and EPS Surprise
 

Avery Dennison Corporation Price and EPS Surprise | Avery Dennison Corporation Quote

Avery Dennison has beaten estimates in each of the trailing four quarters, with an average positive earnings surprise of 6.80%.

Coming to price performance, in the past three months, Avery Dennison has gained 4.5%, underperforming the Zacks classified Office Supplies & Forms sub-industry which witnessed an increase of 7.9% in the same time frame.

Avery Dennison anticipates that sales in retail branding and information solutions will remain sluggish in the fourth quarter. Further, the challenging retail apparel environment will affect its results.

Our proven model does not conclusively show that Avery Dennison is 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. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

The combination of Avery Dennison’s Zacks Rank #4 (Sell) and an Earnings ESP of 0.00% makes an earnings beat unlikely this quarter. Note that we caution against stocks with a Zacks Rank #4 or #5 (Sell-rated stocks) going into an earnings announcement. (Read more: Avery Dennison's Q4 Earnings: Stock to Disappoint?)

Supplier of automotive interiors, batteries and other control equipment, Johnson Controls International plc JCI, is scheduled to report first-quarter fiscal 2017 results on Feb 1. In fourth-quarter 2016, the company reported year-over-year growth in both revenues and earnings.

Johnson Controls International PLC Price and EPS Surprise
 

Johnson Controls International PLC Price and EPS Surprise | Johnson Controls International PLC Quote

The company has an impressive track record of earnings surprises. It has outpaced the Zacks Consensus Estimate in the trailing four quarters, with an average positive earnings surprise of 5.69%.

Johnson Controls has outperformed the Zacks categorized Protection –Safety Equipment and Services sub industry in the last three months. During this period, the company’s share price rose 8.5%, while the sub industry gained 7%.

Johnson Controls continues to accelerate growth in its core buildings and energy businesses. However, divestiture of several businesses has been weighing on the company’s revenues and profits. Further, negative foreign currency translation is affecting Johnson Controls’ results.

Johnson Controls’ Earnings ESP of 0.00% and a Zacks Rank #3 make surprise prediction difficult.

The Manitowoc Company, Inc. MTW, a leading global manufacturer of cranes and lift solutions – is scheduled to report fourth-quarter fiscal 2016 results on Feb 1, after the market closes. In third-quarter, Manitowoc suffered a decline in revenues and reported a loss, wider than the year-ago quarter’s loss.

Manitowoc Company, Inc. Price and EPS Surprise

Manitowoc Company, Inc. Price and EPS Surprise | Manitowoc Company, Inc. Quote

Manitowoc has a mixed track record of earnings surprises. It has outpaced the Zacks Consensus Estimate in two of the trailing four quarters, while falling short in the other two. However, the stock has delivered an average positive surprise of 26.83% in the trailing four quarters.

In the past three months, Manitowoc's shares have been outperforming the Zacks categorized Machinery - Construction/Mining sub industry on a year-to-date basis. The stock has gained 76.2% in comparison with the industry’s growth of 20.2%.

In line with its four-phase growth plan, the company has undertaken steps to balance capacity with demand in North America, total savings from which will be $20 million. This savings will be realized in 2016. For the fourth quarter, Manitowoc anticipates revenues to decline 25–30% year over year and adjusted operating loss margin to lie between 4% and 6%, reflecting the weak mobile crane market and the negative impact on planned absorption from the reduced build schedules.

The combination of Manitowoc’s Earnings ESP of +5.88% and a Zacks Rank #3 makes us reasonably confident of an earnings beat. You can see the complete list of today’s Zacks #1 Rank stocks here.

Manufacturer of glass containers, Owens-Illinois, Inc. OI is scheduled to report fourth-quarter 2016 results on Feb 1, after the closing bell. Owens-Illinois had delivered a year-over-year improvement in both revenues and earnings in the third quarter.

Owens-Illinois, Inc. Price and EPS Surprise
 

Owens-Illinois, Inc. Price and EPS Surprise | Owens-Illinois, Inc. Quote

Owens-Illinois has an impressive earnings surprise history, outpacing the Zacks Consensus Estimate in all the trailing four quarters, with an average earnings beat of 6.97%.

Owens-Illinois has underperformed the Zacks categorized Glass Products industry over the last three months. The stock has dipped 1.5% while the industry has gained 10.4%.

Owen-Illinois’ acquisition of Vitro's food and beverage business will boost both top-line and bottom-line results in the quarter. However, results will be impacted by uncertainty in macroeconomic conditions and currency rates, among other factors.

Though Owens-Illinois’ Zacks Rank #3 increases the predictive power of the ESP, its 0.00% ESP makes surprise prediction difficult. (Read more: Owens-Illinois Q4 Earnings: What's in Store this Time?)

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Johnson Controls International PLC (JCI): Free Stock Analysis Report
 
Owens-Illinois, Inc. (OI): Free Stock Analysis Report
 
Manitowoc Company, Inc. (The) (MTW): Free Stock Analysis Report
 
Avery Dennison Corporation (AVY): Free Stock Analysis Report
 
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