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Factors Likely to Impact Hillenbrand (HI) in Q4 Earnings


Hillenbrand, Inc. HI is slated to report fourth quarter and fiscal 2017 results on Nov 15, after the closing bell. We expect the company’s results to gain from the flourishing Process Equipment business. However, headwinds in the Batesville unit and negative impact of adverse currency translation are expected to mar the company’s performance this season.

The company’s earnings have surpassed the Zacks Consensus Estimate in the preceding five quarters, with an average beat of 10.6% in the trailing four quarters.

Let’s take a look at some of the factors that are likely to impact Hillenbrand’s upcoming results.

What to Expect?

The Zacks Consensus Estimate for fourth quarter and fiscal 2017 has been stable in the past 30 days at 60 cents and $2.08 per share, respectively. Estimates for the fourth quarter are within management’s guided range of $2-$2.10. Notably, the consensus mark for the fourth quarter and the fiscal depicts year-over-year increase of more than 3%.

Further, analysts polled by Zacks expect net revenues of $426.5 million for the fourth quarter, which reflects a 0.5% dip from the year-ago quarter. However, the consensus estimate for fiscal 2017 sales is pegged at $1.57 billion, which represents a 1.9% improvement from last year.

Price, Consensus and EPS Surprise

Factors Impacting the Quarter

Hillenbrand’s Process Equipment business segment appears impressive on the back of higher demand for screening and separating equipments as well as plastics projects. The company has been focusing on capitalizing the opportunities provided by the process equipments market. Also, the acquisition of Coperion has aided Hillenbrand’s pricing and productivity initiatives in this segment. Driven by such upsides, the company expects the process equipments business to flourish and deliver favorable results in the fourth quarter and fiscal 2017 results.

However, Hillenbrand has been struggling with its Batesville business segment for quite some time, due to lower burial volumes in North America, as consumers depict a radical shift toward cremation. Moreover, the performance of this segment remains challenged with higher commodity and fuel costs as well as lower promotional activity. Hillenbrand expects these hurdles to continue hurting the performance of the Batesville business. Additionally, Hillenbrand expects currency headwinds to persist and drag the top-line performance in the fourth quarter.

Nevertheless, the company has been planning to improve working capital structure, through cost reduction and restructuring of operations. These efforts are likely to aid the bottom-line performance in the fourth quarter.

What Does the Zacks Model Unveil?

Our proven model does not conclusively show that Hillenbrand is likely to beat earnings estimates this quarter. This is because a stock needs to have both a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP for this to happen. You may uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Hillenbrand carries a Zacks Rank #3. However, it’s Earnings ESP of 0.00% makes surprise prediction difficult.

Stocks With Favorable Combinations

Here are some companies which, according to our model, have the right combination of elements to deliver earnings beat.

Energizer Holdings Inc ENR has an Earnings ESP of +6.31% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here

United Natural Foods, Inc. UNFI has an Earnings ESP of +6.33% and a Zacks Rank #2.

Tyson Foods Inc TSN has an Earnings ESP of +1.28% and a Zacks Rank #2.

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