Hillenbrand Inc. HI , the holding company for Batesville Casket Company, a leader in the North American death care industry, is set to report third quarter fiscal 2016 results on Aug 3. Last quarter, this global diversified industrial company posted a negative earnings surprise of 14.04%.
Let’s see how things are shaping up prior to this announcement.
Factors to Consider
Hillenbrand’s focus on acquisitions, its global presence and margin expansion through operational improvement have been driving earnings since the past few quarters.
In Feb 2016, Hillenbrand completed its acquisition of Red Valve Company, a global leader in highly-engineered valves. The acquisition will complement the acquisition of ABEL (in November) and will expand its presence in the flow control market. We expect these acquisitions to boost growth in the to-be-reported quarter.
However, the company has been facing certain challenges over the past year, including currency, deficit environment for capital investments and a slowdown in some key markets, especially China. Slower economic growth has been particularly difficult for industries such as mining, plastics, and for equipment used in the production of potash, frac sand and other commodities.
Though the company has taken a number of actions to reduce its costs and boost its profitability, many of the customers will continue to face uncertainty, without any clear signs of improvement in the near term. Additionally, the company forecasts lower volume in the burial market this year due to a lighter-than-expected flu season and an increase in cremation rate. The company continues to expect challenging end markets for the Process Equipment Group and Batesville in fiscal 2016.
HILLENBRAND INC Price and EPS Surprise
HILLENBRAND INC Price and EPS Surprise | HILLENBRAND INC Quote
Earnings Whispers?
Our proven model does not conclusively show that Hillenbrand is likely to beat earnings 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 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: ESP for Hillenbrand is 0.00% as both the Most Accurate Estimate and the Zacks Consensus Estimate stand at 51 cents per share.
Zacks Rank: Hillenbrand has a Zacks Rank #3, which when combined with a 0.00% ESP makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 and #5 (Sell rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Stocks to Consider
Stocks in the industrial sector that have both a positive earnings ESP and a favorable Zacks Rank are:
Harsco Corporation HSC , with an Earnings ESP of +38.46% and a Zacks Rank #1.
Ball Corporation BLL , with an Earnings ESP of +1.01% and a Zacks Rank #3.
Deere & Company DE , with an Earnings ESP of +9.47% and a Zacks Rank #3.
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BALL CORP (BLL): Free Stock Analysis Report
HILLENBRAND INC (HI): Free Stock Analysis Report
DEERE & CO (DE): Free Stock Analysis Report
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Plantations International