Key Predictions for Q3 Earnings Reports of EMR, ZBRA & LABL

A few industrial products companies are gearing up to report quarterly numbers on Nov 6. The Q3 earnings season has crossed the halfway mark, with about 406 S&P 500 companies having already reported results, reconfirming broad-based expectations of strong earnings (as on Nov 3).

Earnings of these companies (accounting for 85.4% of the index’s total market capitalization) are up 7.5% on 6.3% higher revenues. Of these companies, 73.9% have surpassed earnings estimates, with 66.7% coming ahead of revenue estimates.

As per our latest Earnings Preview, dated Nov 3, data projects that the total earnings for the S&P 500 companies are now on track to be up 6.5% from the year-ago period, on 5.6% higher revenues.

The Industrial Products space (which accounts for about 2% of the S&P 500 index’s total market capitalization) is anticipated to chart one of the highest earnings growth rates this quarter amongst all Zacks sectors. In fact, its earnings are on track to be up 18.5% in this quarter, on 4.4% higher sales compared with the last year.

The Industrial Products stocks have performed well in the past six months, with the sector gaining roughly 10.6%, outperforming the S&P 500’s rally of 7.9%. We believe growth-conducive policies of the government and expectations of higher infrastructure spending drove the shares’ performance.

Further, there are economic indicators which point toward a sturdy operating environment for the industry. Industrial production — which measures the level of output of manufacturing, mining and utilities sectors — grew at an annual rate of 4.7% in the second quarter, led by robust growth in mining and utilities. Other tailwinds are the strengthening housing, automotive and commercial construction markets, as well as steady growth in new job additions. These indicators bode well for the industry.

Let’s have a look at how some industrial companies are positioned, ahead of their scheduled announcements tomorrow:

Emerson Electric Company EMR is engaged principally in the worldwide design, manufacture, and sale of a broad range of electrical, electromechanical and electronic products and systems. The company has a modest earnings surprise history, having beaten estimates twice over the trailing four quarters, for an average positive surprise of 5.5%. In the last reported quarter, the company reported in-line earnings.

Our quantitative model does not hint at a likely earnings beat for this Zacks Rank #3 (Hold) company this quarter. This is because for a possible earnings beat, the company should have the right combination of two key ingredients — a positive Earnings ESP and a Zacks Rank #1(Strong Buy), 2 (Buy) or at least 3 (Hold). The combination of Emerson Electric’sZacks Rank #3 and an Earnings ESP of 0.00% makes an earnings beat unlikely this quarter. The Zacks Consensus Estimate for the quarter is pegged at 80 cents. (For more details, read: Emerson to Report Q4 Earnings: Is a Beat in the Cards?).

It should be noted that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into an earnings announcement, especially when the company is seeing a negative estimate revisions momentum. You can see the complete list of today’s Zacks #1 Rank stocks here.

Emerson Electric Company Price, Consensus and EPS Surprise

Emerson Electric Company Price, Consensus and EPS Surprise | Emerson Electric Company Quote

We expect Zebra Technologies Corporation ZBRA to outperform estimates in its quarterly results. Zebra Technologies makes direct thermal and thermal transfer bar code label printers, receipt printers, instant-issuance plastic card printers and secure identification printing systems, related accessories, and support software. The company has a remarkable earnings surprise history, having beaten estimates in each of the trailing four quarters, for an average positive surprise of 5.8%. In the last reported quarter, the company surpassed estimates by 4.1%.

Our quantitative model hints at a likely earnings beat for this Zacks Rank #2 company in the upcoming results. For the to-be-reported quarter, the company’s Earnings ESP of +1.74% and a favorable Zacks Rank #2 indicate that Zebra Technologies’ earnings will likely beat estimates this quarter. Its Most Accurate estimate of $1.75 is higher than the Zacks Consensus Estimate of $1.72.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zebra Technologies Corporation Price, Consensus and EPS Surprise

Zebra Technologies Corporation Price, Consensus and EPS Surprise | Zebra Technologies Corporation Quote

Multi-Color Corporation LABL is one of the largest producers of printed labels for branded consumer products in the United States. The company has a modest earnings surprise history, having beaten estimates thrice in the trailing four quarters, for an average positive surprise of 3.9%. In the last reported quarter, the company crushed estimates by 7.5%.

We do not predict Multi-Color to likely beat expectations this quarter. Though the company’s Zacks Rank #3 increases the predictive power of ESP, its Earnings ESP of 0.00% makes surprise prediction difficult. The Zacks Consensus Estimate for the quarter is pegged at $1.11.

Multi-Color Corporation Price, Consensus and EPS Surprise

Multi-Color Corporation Price, Consensus and EPS Surprise | Multi-Color Corporation Quote

Keep an eye on our full earnings articles to see how these players finally fared in quarter.

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