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Milacron (MCRN) to Report Q1 Earnings: A Beat in Store?

Zacks Equity Research
Updated

Milacron Holdings Corp. MCRN is slated to report first-quarter 2017 results on Apr 27, before the market opens.

Last quarter, the company recorded a positive surprise of 34.29%. Over the trailing four quarters, Milacron exceeded estimates in two occasions, met in another and missed in one, resulting in an average negative surprise of 9.23%. This is depicted in the graph below.

Let’s see how things are shaping up for this announcement.

Milacron Holdings Corp. Price and EPS Surprise

 

Milacron Holdings Corp. Price and EPS Surprise | Milacron Holdings Corp. Quote

Why a Likely Positive Surprise?

Our proven model shows that Milacron is likely to beat estimates because it has the right combination of two key ingredients. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold) to beat estimates, and Milacron has the right mix.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
 
Zacks ESP: The Earnings ESP, which represents the percentage difference between the Most Accurate estimate of 33 cents and the Zacks Consensus Estimate of 32 cents, is +3.13%. This is a meaningful and leading indicator of a likely positive surprise.

Zacks Rank: Milacron’s Zacks Rank #3, when combined with a positive ESP, makes us reasonably confident of a positive surprise this season.

Conversely, we caution against stocks with Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

What's Driving the Better-than-Expected Earnings?

Milacron is likely to benefit from rising demand from plastics in many markets and solid order growth. Notably, demand for a diverse range of finished plastic products is on the rise in many markets, including automotive, construction and consumer products. This is being escalated by global population growth, along with sustained urbanization, increased purchasing power and improved lifestyle in emerging markets.

Milacron expects that profitability will be driven by both sales growth and margin expansion in the quarter to be reported. Sales growth will be supported by underlying market growth in its key segments, geographic expansion of certain product lines and incremental share gain from new products. The company’s global reach resulted in a large installed base of over 40,000 plastic processing machines and over 150,000 hot runner systems as of Dec 31, 2016. Operating margin expansion will be driven by active organizational design and cost-reduction initiatives focused on leveraging the company’s geographic footprint.

Share Price Performance

Year to date, Milacron outperformed the Zacks categorized Manufacturing-Material Handling industry. The company’s shares lost around 4% compared with 5.2% loss incurred by the industry over the said time frame.



Stocks to Consider

Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:

TopBuild Corp. BLD has an Earnings ESP of +5.26% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

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Caterpillar Inc. CAT has an Earnings ESP of +4.84% and a Zacks Rank #1.

Parker-Hannifin Corporation PH has an Earnings ESP of +0.54% and a Zacks Rank #1.

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TopBuild Corp. (BLD): Free Stock Analysis Report
 
Caterpillar, Inc. (CAT): Free Stock Analysis Report
 
Parker-Hannifin Corporation (PH): Free Stock Analysis Report
 
Milacron Holdings Corp. (MCRN): Free Stock Analysis Report
 
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