Industrial electrical equipment maker, GrafTech International Ltd. (GTI) is scheduled to report fourth-quarter 2014 results on Mar 2 before the market opens. The Zacks Consensus Estimate for the quarter is pegged at a loss of 4 cents per share.
GrafTech International’s performance over the last four trailing quarters has been disappointing, with negative earnings surprise in three and positive in one quarter. Average earnings surprise is -218.75%. Last quarter, the company reported loss of 9 cents per share, worse than the Zacks Consensus Estimate of 3 cents of loss per share. Let us see whether the company can beat estimates in the fourth quarter.
Factors to Influence Q4 Results
GrafTech International’s segmental performance as well as its overall profitability is largely influenced by economic activities in the U.S. and the foreign countries it serves. In fourth-quarter 2014, the global economy suffered from decelerating financial activities in Japan and China as well as political unrest in the Eurozone. Moreover, industrial activities in the U.S. were flat in October, and declined 0.1% in December. A 1.3% monthly gain in November came as the only breather.
Difficult operating conditions are anticipated to hamper the product demand for GrafTech International, both domestically and internationally. Also, approximately 5−10% of graphite electrode shipments for the second half of 2014 has been pushed into 2015, thereby impacting revenue generation from the Industrial Materials segment. Further, the company’s Engineered Solutions segment faces headwinds from weak product introductions as well as from bankruptcy of one of its customers.
Earnings Whispers?
Our proven model does not conclusively show that GrafTech International is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP 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: Expected Surprise Prediction or ESP for GrafTech International is currently 0.0%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at a loss of 4 cents per share.
Zacks Rank: GrafTech International currently carries a Zacks Rank #3 (Hold).
We caution against stocks with Zacks Ranks #4 and #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing a negative estimate revision momentum.
Other Stocks to Consider
Here are some companies you may want to consider in the industry as our model shows they have the right combination of elements to post an earnings beat this quarter:
Freescale Semiconductor, Ltd. (FSL), with an Earnings ESP of +5.26% and a Zacks Rank #1 (Strong Buy).
Ballard Power Systems Inc. (BLDP), with an Earnings ESP of +20% and a Zacks Rank #2 (Buy).
Highpower International, Inc. (HPJ), with an Earnings ESP of +8.33% and a Zacks Rank #3.
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