6 Industrial Stocks Likely To Beat Estimates In Q4

The continuous advancements in technologies applied in agriculture and mining industries sustain strong demand for farming and mining machinery. Long-term demand for agricultural equipment will be buoyed by increased global demand for food. Further, favorable trends resulting from growing, and affluent population along with rising living standards and dietary improvements will provide ample opportunity for long-term growth. Moreover, healthy growth in demand for packaged foods and beverages across nations, especially in emerging countries, are significantly increasing the use of highly sophisticated food processing and packaging equipment.

Construction machinery demand will remain strong in the years to come aided by population growth, urbanization, increased energy consumption as well as an expanding middle class. Further, increasing demand for global infrastructure, such as roads, housing, airports, and energy will help sustain growth.

Impressive Performance, Sector Position

Over the past year, the Industrial Products sector (one of the 16 broad Zacks sectors) has clocked a gain of 29.7%, outperforming the S&P 500’s growth of 20.5%.

The Industrial Products sector put up an impressive 19.6% growth in earnings in third-quarter 2017. At the onset of the fourth-quarter earnings season, investors remain eager to know about the performance of the sector in this quarter. Of the 4.2% of the S&P 500 participants that have reported so far, a 15.1% earnings growth has been recorded on the back of a 23.8% rise in revenues. The beat ratio is an impressive 100% for both the metrics. Per our latest projections, the sector will put up an earnings growth of 22.2% while revenues will advance 11.9% in fourth-quarter 2017. It is one the six sectors that is expected to log double-digit growth in earnings in the fourth quarter. 

We put our Sectors (all 16 of them) into two groups: the top half (i.e., sectors with the best average Zacks Rank) and the bottom half (the sectors with the worst average Zacks Rank). In the last 10 years, using a one week rebalance, the top half beat the bottom half by more than twice as much. (To learn more visit: About Zacks Sector Rank) The industrial products sector, with a Zacks Sector Rank #8, enjoys a position in the top half.

How to Identify the Outperformers?

The encouraging figures suggest that there are a number of companies likely to beat our fourth-quarter earnings estimates. Investing in such companies can fetch handsome returns for investors. This is because a stock generally surges upon earnings beat.

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Disclosure: Zacks.com contains statements and statistics that have been obtained from sources believed to be reliable but are not guaranteed as to accuracy or completeness. References to any ...

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