Premium diversified machinery company Actuant Corporation ATU is scheduled to report first-quarter fiscal 2016 results before the opening bell on Dec 17. Over the last four quarters, the company reported a positive average earnings surprise of 7.04%. Let’s see how things are shaping up prior to this announcement.
Factors to Influence Q1 Results
Actuant holds a high brand value in the market. Backed by certain strategic initiatives associated with growth and cost saving, the company aims to generate superior results in the to-be-reported quarter. Further, the company’s capital deployment policy reflects a strong cash position.
Actuant constantly attempts to improve its business with the help of strategic acquisitions. The Hayes Industries acquisition continues to support the company’s Industrial segment revenues. Moreover, Viking sales growth in the near term can help fortify the company’s Energy segment revenues. The company also expects increased Chinese trade and stronger European Original Equipment Manufacturer (OEM) heavy-duty truck production to augment the revenues of its Engineered Solutions segment, going forward. These factors will likely support the company’s revenue growth in the quarter under review.
However, on the other hand, the company believes that external headwinds such as a strong U.S. dollar and lower demand in the general industrial, oil & gas, mining and agricultural markets might adversely affect its financial performance in the first quarter of 2016. Based on the current business scenario, the company expects sales in a range of $1.16–1.20 billion and earnings within $1.20–$1.40 per share for full-year fiscal 2016.
Earnings Whispers
Our proven model does not conclusively show that Actuant is likely to beat earnings in the quarter under review. That 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 an earnings beat. That is not the case here as we will see below.
Zacks ESP: Actuant’s Earnings ESP is 0.00%, as the Most Accurate estimate of 24 cents stands in line with the Zacks Consensus Estimate.
Zacks Rank: Actuant’s Zacks Rank #3, when combined with a 0.00% ESP, makes predictions difficult.
Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies you may want to consider as our model shows these have the right combination of elements to post an earnings beat this quarter:
Brady Corp. BRC, with an Earnings ESP of +4.55% and a Zacks Rank #1.
Regal Beloit Corporation RBC, with an Earnings ESP of +0.89% and a Zacks Rank #3.
Ideal Power, Inc. IPWR, with an Earnings ESP of +3.13% and a Zacks Rank #3.
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