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Barnes Group (B) to Report Q4 Earnings: What to Expect?

Zacks

Machinery company Barnes Group Inc. B is set to release fourth-quarter 2017 results on Feb 16, before the market opens.

The company delivered better-than-expected results in three of last four quarters while lagged estimate in one. Average earnings surprise for the four quarters is a positive 9.02%. In the last quarter, the company’s earnings of 66 cents per share came in below the Zacks Consensus Estimate of 69 cents.

In the last three months, the company’s shares have declined 2.6%, against 4.8% growth recorded by the industry it belongs to.



Let us see how things are shaping up for Barnes Group this quarter.

Factors to Affect Q4 Results

We believe that growth in the industrial production and export machinery orders, as well as strengthening housing market in the United States, will boost the prospects of machinery companies in the country. Also, the government’s promised-growth policies, especially the $1 trillion spending on infrastructure improvement and healthy global growth backdrop will be advantageous.

Barnes Group anticipates its sales to grow 15.5-16.5% year over year in 2017, including an expectation of sales growth in mid-teens, for both the Industrial and Aerospace segments. Organic sales are predicted to grow 10.5-11.5% and acquisitions gain will likely be 5%. Adjusted earnings per share are anticipated to grow 12-14% year over year to $2.84-$2.89 range.

For the Industrial segment, aging population requiring medical attention, governmental spending on infrastructure development, better operating conditions in international markets served, a rise in light vehicle production, demand for technologically advanced components and need to meet fuel efficiency standards will be advantageous. Sales from the Molding Solutions business will likely grow in high 20’s in 2017, while that from Nitrogen Gas Products will grow in mid-teens and sales from Engineered Components will be up in low single-digits.

In the first three quarters of 2017, the surprise history of the Industrial segment has been impressive, with an average positive sales surprise of 5.62%. Fourth-quarter sales are projected to be $238 million.

For the Aerospace segment, rising air travel by the middle class, growing requirement of aftermarket services and the need for better and innovative products and solutions to original equipment manufacturers (OEM) of aircrafts will be beneficial. Sales from OEM is predicted to rise in mid-teens in 2017, while that from Maintenance, Repair and Overhaul will likely grow in low double-digits and sales from Spare Parts will be up roughly 20%.

In the first three quarters of 2017, the Aerospace segment’s average sales surprise is a positive 6.53%. Fourth-quarter sales are estimated to be $124 million.

On the flip side, Barnes Group faces a competitive environment from small to large players in the industry manufacturing similar products or providing similar services. Also, difficulties or delays in research and development or production and services, along with the failure of new products and technologies in the market, may significantly impact the company’s competitive position. Also, the company continues to face risks associated with sudden inflation in input price or supply shortage. Moreover, the company’s international businesses have exposed it to risks arising from unfavorable movements in foreign currencies and geopolitical issues.

Earnings Whispers

Our proven model provides some idea on the stocks that are about to release their earnings results. Per the model, a stock needs to have a combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy) or 2 (Buy) or 3 (Hold) for likely earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

The case with Barnes Group is given below.

Zacks ESP: Earnings ESP of Barnes Group is currently 0.00%. The Most Accurate estimate and the Zacks Consensus Estimate are both pegged at 68 cents.

Barnes Group, Inc. Price, Consensus and EPS Surprise

Barnes Group, Inc. Price, Consensus and EPS Surprise | Barnes Group, Inc. Quote

Zacks Rank: Barnes Group currently carries a Zacks Rank #3.

Note that we caution against stocks with 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 other companies in the machinery space that you may want to consider, as they have the right combination of elements to post an earnings beat this quarter, according to our model.

Deere Company DE, with an Earnings ESP of +4.89% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Altra Industrial Motion Corporation AIMC, with an Earnings ESP of +1.03% and a Zacks Rank #3.

Nordson Corporation NDSN, with an Earnings ESP of +2.87% and a Zacks Rank #3.

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