We believe that economic uncertainties in some developed and emerging nations, soft commodity prices and forex woes played spoilsport for industries like Industrial Products in second-quarter 2016. However, the impact of such headwinds is subdued compared with first-quarter 2016. In the U.S., roughly 1% year-over-year decline in industrial production is believed to have impacted industrial machine and tool makers.

According to the Zacks Industry classification, the machinery industry is broadly grouped under Industrial Products, one of the 16 broad Zacks sectors. Per our report dated Jul 15, earnings for the Industrial Products sector are expected to decline 8.6% in the second quarter, while revenues will likely fall 5.6%.

What’s in Store for 2 Machinery Stocks, GGG and ITW?

Below we discuss briefly the expectations from the upcoming results (Apr-Jun quarter) for two machinery stocks:

Graco Inc. (GGG - Snapshot Report) : This machinery company is slated to release its second-quarter 2016 results on Jul 20, after the market closes. In the four trailing quarters, the company reported below-expected results in one while surpassing estimates in the rest with an average positive earnings surprise of 8.84%.

GRACO INC Price and EPS Surprise

GRACO INC Price and EPS Surprise | GRACO INC Quote

Our proven model does not conclusively show that Graco Inc. is likely to beat earnings this quarter. This is because the company lacks the right combination of two key ingredients – a positive Earnings ESP (the percentage difference between the Most Accurate estimate and the Zacks Consensus Estimate) and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold). The company currently carries a Zacks Rank #4 (Sell) and a 0.00% ESP. Over the last 60 days, the Zacks Consensus Estimate for the stock remained unchanged at 99 cents for second-quarter 2016.

Illinois Tool Works Inc. (ITW - Analyst Report) : This machinery stock is gearing up to release its second-quarter 2016 results on Jul 20, before the market opens. The company reported better-than-expected results over the four trailing quarters, with an average positive earnings surprise of 1.95%.

ILL TOOL WORKS Price and EPS Surprise

ILL TOOL WORKS Price and EPS Surprise | ILL TOOL WORKS Quote

Our proven model does not conclusively show that Illinois Tool Works will beat earnings this quarter because it currently carries a Zacks Rank #3 and a 0.00% Earnings ESP. The Zacks Consensus Estimate for the stock is currently pegged at $1.40 for second-quarter 2016. (For more please read: Illinois Tool To Report Q2 Earnings: What's in Store?)