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Industrial Stocks’ Q3 Earnings on Oct 18: GWW, ASTE, TEX


While the big banks have had an encouraging start to the third-quarter earnings season, the projected estimates don’t paint a pretty picture. According to the projected estimates in our Earnings Preview for the still-to-report 464 companies, total S&P 500 earnings will be down 2.2%, while revenues will rise 1.5%. In all probability, this will be the sixth consecutive quarter of an earnings decline.

A mere 4.3% of the companies in the industrial products sector (one of the 16 broad Zacks sectors) have reported numbers so far, putting up 16% earnings growth for the quarter. Our projections for the quarter reflect 3.4% growth in the sector’s earnings.

With plenty of companies slated to report results starting this week, let’s see how the quarter unfolds for these three industrial players, all of which are scheduled to release third-quarter numbers on Oct 18.

W.W. Grainger, Inc. GWW, the provider of maintenance, repair, and operating (MRO) supplies, missed both earnings and revenue estimates last quarter. The company has an average earnings beat of 3.14% in the trailing four quarters.

GRAINGER W W Price and EPS Surprise

GRAINGER W W Price and EPS Surprise | GRAINGER W W Quote

The company stands to benefit from acquisitions and focus on restructuring activities. However, weak monthly sales, lower oil and gas prices, currency headwinds and weak macroeconomic conditions in Canada will put pressure on near-term results. The Zacks Consensus Estimate for third-quarter earnings is $3.02, reflecting a 0.3% year-over-year dip. Grainger has an Earnings ESP of -0.33% and it carries a Zacks Rank #3 (Hold), which makes an earnings beat uncertain this quarter. (Read More: Will Q3 Earnings Hold a Surprise for Grainger Stock?)

Astec Industries, Inc. ASTE is a manufacturer and marketer of road building equipment. In the last quarter, the company’s earnings and revenues both surpassed the Zacks Consensus Estimate.

ASTEC INDS INC Price and EPS Surprise

In the prior quarter, Astec Industries posted a positive surprise of 5.33%. However, the stock missed earnings twice in the trailing four quarters, with an average negative surprise of 25.32%. The Zacks Consensus Estimate for the quarter is 37 cents, reflecting 274% year-over-year growth.

For Astec, momentum in the domestic business will continue, as seen from its robust backlog. Passage of the highway bill and pellet plant order augurs well for the infrastructure group. However, its international backlog continues to be hurt by the strong U.S. dollar, low oil and natural gas prices, and the global mining slowdown. Astec has a Zacks Rank #3, which along with a 0.00% ESP, makes earnings prediction difficult. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Terex Corporation TEX is a global equipment manufacturer catering to the construction, infrastructure and surface mining industries. The company’s earnings surpassed the Zacks Consensus Estimate in the last quarter, while revenues fell short of the same. It has missed the Zacks Consensus Estimate in three of the last four quarters, with an average negative earnings surprise of 34.89%. The company has an Earnings ESP of -13.64% and a Zacks Rank #3. This makes an earnings beat unlikely this quarter.

TEREX CORP Price and EPS Surprise

For the third quarter, the Zacks Consensus Estimate is 22 cents, reflecting a 62.93% year-over-year decline. Terex will gain from its cost-saving initiatives and product development. However, lower demand for replacement of machines, a weak mining market, and choppy oil and gas prices remain woes.

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