Industrial Stocks' Jan 27 Q4 Earnings Roster: DOV, BLL & More

The Industrial Products sector’s results for the final quarter of 2021 might reflect the benefits of the expansion in manufacturing activity on the back of the broader economic recovery. Per the Federal Reserve, total industrial production rose at an annual rate of 4% in the fourth quarter. Manufacturing output increased at an annual rate of 5%. This is expected show on the quarterly results of the industry participants. However, the ongoing supply chain, labor, freight and logistics challenges in the industry might have impaired the ability of the companies to meet these demand levels. Inflated material, freight and labor costs are anticipated to have put margins under pressure in the quarter under review.

Due to these factors, the Industrial Products sector’s earnings for the fourth quarter are expected to decline 1.6% despite an 8% growth in revenues, per the latest Earnings Trends report. The sector is among five of the 16 Zacks Sectors expected to suffer a decline in earnings in the fourth quarter.

Strong demand from the U.S. residential construction sector and the ongoing recovery in the non-residential construction sector may have favored the industry participants in the quarter to be reported. The sector players engaged in packaging for food, medicines, home and personal care products might have benefited from higher demand amid the pandemic. Overall commodity prices have improved through the quarter, which is expected to have driven improved order levels for companies dealing in mining equipment. Overall increasing manufacturing activity might have translated into improved order levels over the course of the fourth quarter for the companies in the sector.

Meanwhile, the COVID-19 pandemic has impacted factory productivity and the supply chain. These supply chain and capacity challenges have led to higher transportation and labor costs due to the need to deliver finished goods to customers in a timely manner. Restrictions or disruptions of transportation, such as reduced availability of air transport, port closures and increased border controls or closures, have in certain cases resulted in higher costs and delays, both for obtaining raw materials and components, and shipping finished goods to customers. The sector players have been witnessing tight labor availability for some positions and incurring higher labor costs to attract staff in its manufacturing operations to meet the escalating demand. COVID-19 related worker absenteeism also remains an issue.

Labor shortage and supply chain issues might have weighed on their ability to meet the high demand. Elevated raw material costs remained a headwind through the quarter. However, several of the sector participants have been focusing on pricing actions, cost-cutting measures, efforts to improve productivity and efficiency and diversification of supplier base, which may have offset the abovementioned impacts.

Thus it will be interesting to see how some of the companies belonging to this sector fare when they release quarterly numbers on Jan 27.

Dover Corporation DOV is scheduled to report fourth-quarter 2021 results before the opening bell. The company beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average surprise being 13.8%.

Dover Corporation Price and EPS Surprise

Dover Corporation Price and EPS Surprise

Dover Corporation price-eps-surprise | Dover Corporation Quote

Per the Zacks quantitative model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can see the complete list of today’s Zacks #1 Rank stocks here.

Our proven model conclusively predicts an earnings beat for Dover this time around. Dover currently has an Earnings ESP of +0.33% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.

Dover’s fourth-quarter results are likely to reflect robust order trends across most of its business, particularly in Engineered Products, Pumps & Process Solutions and Refrigeration & Food Equipment segments. While the impact of material cost inflation, labor shortage and supply chain headwinds might have dented margins, the company’s efforts to boost productivity, cost initiatives and restructuring programs are expected to have offset these headwinds and led to margin expansion in the quarter. (Read more: Dover to Report Q4 Earnings: Is a Beat in Store?)

The Zacks Consensus Estimate for Dover’s fourth-quarter earnings has remained unchanged at $1.66 over the past 30 days. It suggests a 7% improvement from the prior-year quarter.

Ball Corporation BLL is scheduled to report fourth-quarter 2021 results before the opening bell. The company has surpassed the Zacks Consensus Estimate for earnings in three of the trailing four quarters and missed once, the average surprise being 2.7%.

Ball Corporation Price and EPS Surprise

Ball Corporation Price and EPS Surprise

Ball Corporation price-eps-surprise | Ball Corporation Quote

Ball Corp has an Earnings ESP of +0.68% and a Zacks Rank #4 (Sell).

Ball Corp has been experiencing elevated demand, courtesy of strong global beverage-can demand lately as consumers now prefer cans over glass and plastic. Demand for aluminum packaging products and services to consumer-oriented end-markets, such as food and beverages, household and healthcare has been robust on increased at-home consumption amid the pandemic. These factors, along with a robust backlog at its Aerospace segment, are expected to have contributed to its revenue growth in the fourth quarter. Elevated input and freight costs and higher-than-expected start-up costs due to the ongoing capacity-expansion efforts may have impacted margins in the quarter. (Read more: Ball Corp to Post Q4 Earnings: What's in the Cards?)

The Zacks Consensus Estimate for Ball Corp’s fourth-quarter 2021 earnings is currently pegged at 90 cents, which indicates an improvement of 11% from the year-ago quarter. The estimate has remained stable over the past 30 days.

Rockwell Automation Inc. ROK is scheduled to release first-quarter fiscal 2022 results, before the market open. The company has surpassed the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average surprise being 13.8%.

Rockwell Automation, Inc. Price and EPS Surprise

Rockwell Automation, Inc. Price and EPS Surprise

Rockwell Automation, Inc. price-eps-surprise | Rockwell Automation, Inc. Quote

Rockwell Automation currently has an Earnings ESP of -2.96% and a Zacks Rank of 3.

The company’s first-quarter fiscal 2022 results are likely to reflect robust backlog levels and strong order flows driven by robust demand for core automation and digital transformation solutions with strong growth in Connected Services. Contributions from recent acquisitions are likely to have contributed to the top-line growth. Meanwhile, inflated costs for commodities, components and freight services are expected to have dented the company’s margins in the quarter to be reported. ROK’s focus on process improvement, functional streamlining, material cost savings and manufacturing productivity is likely to have negated some of these impacts. (Read more: What's in Store for Rockwell Automation's Q1 Earnings?)

The Zacks Consensus Estimate for Rockwell Automation’s fiscal first-quarter earnings is currently pegged at $2.00, which suggests a decline of 16% from the year-ago quarter. The estimate has moved up 2% over the past 30 days.

A. O. Smith AOS is scheduled to report fourth-quarter 2021 results before the opening bell. The company has surpassed the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average surprise being 16.8%.

A. O. Smith Corporation Price and EPS Surprise

A. O. Smith Corporation Price and EPS Surprise

A. O. Smith Corporation price-eps-surprise | A. O. Smith Corporation Quote

A. O. Smith currently has an Earnings ESP of 0.00% and a Zacks Rank of 3.

The company’s fourth-quarter results are likely to reflect robust demand for water heaters, boilers, and water treatment products in North America, supported by its strong retail and direct-to-consumer sales channel and pricing actions. Growth in demand in China and the company’s focus on investments in product developments, production efficiency, and strong price management capabilities might have acted as tailwinds in the quarter. However, supply chain constraints, inflated costs, and shortage of labor may have negated some of these gains. (Read more: A. O. Smith to Report Q4 Earnings: What's in the Cards?)

The Zacks Consensus Estimate for A. O. Smith’s fourth-quarter 2021 earnings is currently pegged at 77 cents, which indicates an improvement of 4% from the year-ago quarter. The estimate has remained stable over the past 30 days.

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