The Manitowoc Company, Inc. (MTW) is set to report fourth-quarter 2014 results on Jan 29, after the market closes. Last quarter, the company posted a negative earnings surprise of 20%. Let’s see how things are shaping up for this announcement.
Factors at Play
In the third quarter, lower crane demand pulled down Manitowoc’s earnings by 10% from the year-ago quarter to 36 cents per share. The Crane segment continues to bear the brunt of weak North American rough-terrain and boom truck markets (approximately half of crane’s revenues) as well as ongoing weakness in the Latin American region, resulting in weak sales. Ongoing global demand pressure, slower-than-anticipated recovery in the non-residential construction market and uncertain macroeconomic improvement continue to negatively impact the segment’s revenues.
Manitowoc guided that Crane segment sales will decline to mid-to high-single digits in 2014 with a 7% operating margin. Even though the company is trying to improve the segment’s operating profile, given the weak end-market conditions, margins may remain affected in the next few quarters.
Moreover, in the Foodservice segment, Asia-Pacific continues to be a drag as the U.S. chains have decided to reduce capital expenditure in the region due to weak demand.
Earnings Whispers?
Our proven model does not conclusively show that Manitowoc is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP (Expected Surprise Prediction) and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Zacks ESP: The Earnings ESP for Manitowoc is 3.03% since the Most Accurate estimate is at 34 cents, higher than the Zacks Consensus Estimate of 33 cents.
Zacks Rank #5 (Strong Sell): Manitowoc has a Zacks Rank #5, which when combined with a 3.03% ESP, indicates that the company is likely to miss the earnings forecast this quarter. We particularly caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings season.
Other Stocks to Consider
Here are some companies from the industrial products sector that, according to our model, have the right combination of elements to post an earnings beat this quarter:
Noranda Aluminum Holding Corp. (NOR) has an earnings ESP of +30.00% and a Zacks Rank #1(Strong Buy). It is expected to report results on Feb 18.
Century Aluminum Co. (CENX) has an earnings ESP of +7.69% and a Zacks Rank #2 (Buy). It is expected to report results on Feb 19.
Zebra Technologies Corp. (ZBRA) has an Earnings ESP of +65.63% and holds a Zacks Rank #3 (Hold).
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