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Industrial Stocks Q3 Earnings to Watch on Oct 26: IEX and More

Industrial players’ third-quarter 2021 earnings results are expected to reflect the impacts of improving economic activities as the pandemic-related restrictions subside globally. Supply-chain hurdles are also expected to have deterred growth. However, solid fundamentals are anticipated to have helped industrial companies to tide over the difficulties.

It is worth noting here that the earnings and revenue outlooks for the S&P 500 companies for the third quarter of 2021 suggest improvements from the previous quarter. Per the report dated Oct 22, third-quarter earnings of S&P 500 companies are expected to increase 32.5%, while revenues are predicted to grow 14.4% year over year. Notably, in the second quarter of 2021, the S&P 500 recorded an earnings growth of 95% and revenue improvement of 25%.

Many industrial players — coming under the ambit of the Zacks Industrial Products sector — are expected to release their results this and the coming week. Notably, 7.7% of industrial product companies reported their results for the third quarter as of Oct 20, 2021. Collectively, earnings of these companies have grown 16.4% and revenues have expanded 12% year over year. The earnings beat was 100% in both the cases.

Below we have discussed the key factors that are expected to have contributed to other companies’ performances in the quarter under review.

Key Factors for Industrial Stocks

In the past couple of quarters, many industrial players have suffered from the adverse impacts of supply-chain restrictions, especially those related to the availability of semiconductors chips. This delayed the production processes and thus, widened the gap between demand and supply. Inflationary pressures in raw materials, logistics and labor have been other headwinds. These trends are expected to have impacted industrial players’ performances in the third quarter as well.

In September, industrial production in the United States declined 1.3% from the previous month. It recorded a month-over-month fall of 0.1% in August. Manufacturing production was down 0.7% and 0.4% in September and August, respectively. Despite the monthly setbacks, industrial production increased 4.3% year over year in the third quarter of 2021.

Healthy e-commerce businesses; solid demand for security, health, and home improvement products; better trade activities in international markets; effective pricing activities; and innovative product introductions are expected to have been tailwinds in the quarter.

Per projections as of Oct 20, earnings for the industrial stocks are expected to increase 25.1% year over year for the third quarter of 2021 and revenues are expected to grow 14.7%. Notably, the projections suggest declines from earnings growth of 83.7% and a revenue increase of 32.4% recorded in the second quarter of 2021.

Stocks to Report Third-Quarter Results on Oct 26

Below, we briefly discussed what we expect from the upcoming results of the four industrial stocks mentioned below.

IDEX Corporation IEX will release third-quarter results after market close. The company reported better-than-expected results in three of the last four quarters, while lagging estimates once. It has a trailing four-quarter earnings surprise of 6.73%, on average.

IDEX Corporation Price, Consensus and EPS Surprise

 

IDEX Corporation price-consensus-eps-surprise-chart | IDEX Corporation Quote

Our proven model does not conclusively predict an earnings beat for IDEX this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of beating estimates. That is not exactly the case with IDEX. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Currently, IDEX has a Zacks Rank #3 and an Earnings ESP of -0.84%. The company is likely to have gained from strengthening end markets, solid product offerings, and acquired assets. However, cost inflation, logistics issues and supply-chain hurdles are expected to have ailed.

You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for the company’s quarterly earnings has been unchanged at $1.60 per share in the past 60 days.

Pentair plc PNR is expected to release third-quarter results before market open. In the last four quarters, the company recorded better-than-expected results. It has a trailing four-quarter earnings surprise of +20.88%, on average.

Pentair plc Price, Consensus and EPS Surprise

 

Pentair plc price-consensus-eps-surprise-chart | Pentair plc Quote

Presently, the company has a Zacks Rank #3 and an Earnings ESP of -2.51%. It is expected to have benefited from healthy demand in pool construction, pool maintenance, and improvements in industrial and commercial businesses. However, weakness in demand from restaurants and hospitality markets, inflationary pressures, and supply-chain woes are likely to have ailed. (For further information please read: Pentair to Report Q3 Earnings: What's in the Cards?)

In the past 60 days, the Zacks Consensus Estimate for the company’s quarterly earnings has been unchanged at 84 cents per share.

Hubbell Incorporated HUBB will report third-quarter results before market open. It recorded better-than-expected results in three of the last four quarters, while lagging estimates once. The company has a trailing four-quarter earnings surprise of +6.10%, on average.

Hubbell Inc Price, Consensus and EPS Surprise

 

Hubbell Inc price-consensus-eps-surprise-chart | Hubbell Inc Quote

Presently, Hubbell has a Zacks Rank #3 and an Earnings ESP of 0.00%. Woes related to supply-chain restrictions and material inflation are expected to have hurt its performance. However, benefits from the recovery in utility and electrical markets, and solid operational execution are anticipated to have aided the company.

In the past 60 days, the Zacks Consensus Estimate for the quarter earnings have been decreased 7.3% to $2.29 per share.

Xerox Holdings Corporation XRX will report third-quarter results before market opens. It recorded better-than-expected results in two of the last four quarters, while lagged estimates in the other two. The company has a trailing four-quarter earnings surprise of +31.65%, on average.

Xerox Holdings Corporation Price, Consensus and EPS Surprise

 

Xerox Holdings Corporation price-consensus-eps-surprise-chart | Xerox Holdings Corporation Quote

Presently, it has a Zacks Rank #4 and an Earnings ESP of +4.65%. Lower subsidies by the government, issues with FUJIFILM Business Innovation royalty revenues, and a hike in delivery and freight costs are likely to have ailed. However, the company is expected to have gained from an improvement in post-sale and equipment revenues. (For further information please read: Xerox to Report Q3 Earnings: What's in the Cards?)

In the past 60 days, the Zacks Consensus Estimate for quarterly earnings has been decreased by 1.44% to 43 cents per share.


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Xerox Holdings Corporation (XRX): Free Stock Analysis Report
 
IDEX Corporation (IEX): Free Stock Analysis Report
 
Pentair plc (PNR): Free Stock Analysis Report
 
Hubbell Inc (HUBB): Free Stock Analysis Report
 
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