What’s in the Cards for Ball Corp (BLL) in Q2 Earnings?

Ball Corporation BLL is expected to report second-quarter 2018 results before the opening bell on Aug 2.

In the last reported quarter, the company’s adjusted earnings surpassed the Zacks Consensus Estimate by more than 11%. Notably, Ball Corporation’s earnings outpaced estimates in two out of the trailing four quarters, with an average positive beat of 2.75%.

Let’s see how things are shaping up for this announcement.

Factors at Play

Ball Corporation's volume growth is predicted to be slower in Brazil than the market rate due to competition which will impact its second-quarter sales. It also anticipates tougher year-over-year comparison in second-half 2018 for the business, due to the lack of profit recorded on the INS manufacturing contract in 2017. This remains a major drag for the reported quarter’s performance.

Further, Ball Corporation continues to witness decline in domestic beer consumption which will impact results for the June-end quarter. Also, challenging food-industry dynamics and supply disruptions in North American beverage due to the hurricanes in 2017 remain headwinds.

In addition, the company's performance might have been marred by volatile volumes in the Europe, Middle East and Africa (EMEA) beverage-can business.

Due to these factors, the Zacks Consensus Estimate for Ball Corporation’s earnings moved down roughly 6.5%, over the last 90 days, and is currently pegged at 58 cents for the quarter. The earnings estimate reflects year-over-year growth of more than 9%. The Zacks Consensus Estimate for total sales of $3.0 billion for the quarter also indicates 6% rise from the prior-year quarter.

Coming to segments, we expect net sales for Ball Corporation's Beverage packaging, South America segment to be around $362 million, reflecting an increase of around 4% year over year. Our consensus estimates indicate that Ball Corporation's sales in the Beverage packaging, Europe segment, will reach $731 million in the second quarter, reflecting year over year growth of 10%.

The Zacks Consensus Estimate indicates that Ball Corporation's Food and Aerosol Packaging segment's revenues will reach $278 million in the to-be-reported quarter, reflecting year-over-year improvement of about 1.5%.

Notably, though the company continues to make progress on global finance transformation projects and corporate cost-cutting initiatives, Ball Corporation will face a tight supply-and-demand situation.

Moreover, shares of Ball Corporation have lost around 8% over the past year, outperforming 11% loss recorded by the industry.

Earnings Whispers

Our proven model does not conclusively show that Ball Corporation 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 at least 3 (Hold) for this to happen. This is not the case here, as you will see below:

Earnings ESP: Ball Corporation has an Earning ESP of +1.03%. This is because the Most Accurate Estimate of 59 cents per share comes above the Zacks Consensus Estimate of 58 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Ball Corporation carries a Zacks Rank #4 (Sell). It should be noted that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

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. The company’s shares have gained 12% during the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

Columbus McKinnon Corporation CMCO, with an Earnings ESP of +4.20% and a Zacks Rank of 3. Its shares have appreciated roughly 60% in the past year.

Emerson Electric Co. EMR, with an Earnings ESP of +0.15% and a Zacks Rank #3. The stock has rallied 20% in a year’s time.

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