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Barnes Group (B) to Report Q2 Earnings: What's in the Cards?

Barnes Group Inc. B is set to release second-quarter 2018 results on Jul 27, before market open.

The machinery company reported better-than-expected results in three of the last four reported quarters while lagging estimates in one. The average four-quarter positive earnings surprise for the company is 6.23%. In the last reported quarter, Barnes Group’s earnings of 72 cents per share were above the Zacks Consensus Estimate of 67 cents.

In the past month, the company’s shares yielded 3.3% return against 2% growth recorded by the industry it belongs to.



Let us see how things are shaping up for Barnes Group this quarter.

Factors to Influence Q2 Results

Barnes Group gains from its exposure in the industrial and aerospace markets by serving a vast customer base with its high-quality industrial technologies and engineered products. Also, efforts to improve operational efficiency, building solid customer relationships, expanding businesses through acquisitions and growing aftermarket sales services will be beneficial.

Though no specific financial guidance has been provided for second-quarter 2018, Barnes Group’s expectation for the full year will give a rough idea of the factors that might influence second-quarter results. For 2018, the company anticipates earnings per share to be $3.03-$3.15, reflecting growth of 5-9% from the year-ago figure. Total revenues are projected to grow 5-6% on organic sales growth of 3-4% and forex gains of 2%. Segmental discussions are provided below:

For the Industrial segment, launch of an automotive program in Europe and Asia will spur demand for hot runners in these regions. Also, healthy businesses in personal care and medical end markets and gains from FOBOHA acquisition will benefit Molding Solutions business. The Nitrogen Gas Products business will gain from strengthening global tool and die market, while softness in North American automotive market might be a spoilsport. Also, the acquired assets of Industrial Gas Springs Group Holdings Limited will be beneficial. The Engineered Components business will benefit from anticipated growth in automotive production globally.

Additionally, we believe that strengthening industrial production in the United States, expanding manufacturing sector, and rise in orders for U.S.-made machinery will be a boon for industrial companies.

In the last four reported quarters, the surprise history of the Industrial segment was impressive, with an average positive sales surprise of 5.25%. Second-quarter sales are projected to be $262 million, above $246 million generated in the previous quarter and $252 million in the year-ago quarter.

Rising air travel by the middle class and the need for better and innovative products and solutions by original equipment manufacturers (OEM) of aircraft will support the Aerospace segment. Aircraft deliveries and demand for aftermarket services and spare parts are anticipated to remain solid in the year.

Second-quarter sales for the Aerospace segment are estimated to be $124 million, above $121 million generated in the previous quarter and $113 million in the year-ago quarter.

On the flip side, inflation in input price or supply shortage and competition from international businesses might temper the growth momentum. Also, industry competition and delays or difficulties in research and development of products and technologies might be pose concerns.

For the second quarter, operating income of the Aerospace segment is expected to decline 8.9% sequentially to $22.10 million while that of the Industrial segment is anticipated to grow 13.3% sequentially to $36.69 million.

Earnings Whispers

Our proven model provides some idea on the stocks that are about to release their earnings results. Per the model, a stock needs to have a combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for likely earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

The case with Barnes Group is given below.

Earnings ESP: Earnings ESP of Barnes Group is currently -1.66% as the Most Accurate Estimate of 74 cents is below the Zacks Consensus Estimate of 75 cents.

Barnes Group, Inc. Price, Consensus and EPS Surprise
 

Barnes Group, Inc. Price, Consensus and EPS Surprise | Barnes Group, Inc. Quote

Zacks Rank: Barnes Group currently carries a Zacks Rank #3. This combined with a negative ESP makes earnings surprise prediction difficult.

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

Stocks to Consider

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

Graco Inc. GGG has an Earnings ESP of +4% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Atkore International Group Inc. ATKR has an Earnings ESP of +1.49% and a Zacks Rank #3.

Rexnord Corporation RXN has an Earnings ESP of +3.74% and a Zacks Rank #3.

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