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Milacron (MCRN) to Report Q4 Earnings: A Surprise in Store?
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Milacron Holdings Corp. is scheduled to report fourth-quarter 2017 results on Feb 20, before the opening bell. In the last reported quarter, the company had delivered improvement in both the top and bottom line.
Last quarter, Milacron surpassed the Zacks Consensus Estimate by 4.76%. The company beat estimates in three of the trailing four quarters, delivering an average positive earnings surprise of 12.8%.
Let’s see how things are shaping up for this announcement.
Milacron recorded orders of $322 million in third-quarter 2017. In the first nine months of 2017, orders were up nearly 10%. This performance reflects continued strength in high-growth regions and a solid order book, both for Milacron’s injection and extrusion product lines going into 2018.
For the fourth quarter, the Zacks Consensus Estimate for sales is pegged at $303 million which projects growth of 5% over the $289 million in the prior-year quarter. The year–over-year improvement will be aided by continued orders and sales momentum along with strength in global markets, particularly in Asia and Europe and growth across all segments.
According to our latest consensus estimates, Milacron is anticipated to post net sales of $168 million for the fourth quarter in its Advanced Plastic Processing Technologies (“APPT”) segment, reflecting year–over-year growth of 5%. Further, our consensus estimates indicate that net sales of Melt Delivery and Control Systems will reach $106 million in the quarter, a projected year-over-year growth of 5%. The Zacks Consensus Estimate for Fluid Technologies is pegged at $29.7 million, a rise of 6% from the $28 million reported in the year-ago quarter.
For the APPT segment, adjusted EBITDA will rise 7% year over year to $21.7 million. Adjusted EBITDA will be $6.7 million for the Fluid Technologies segment, a 13% year-over-year improvement. The Melt Delivery and Control Systems segment’s adjusted EBITDA is projected at $34 million, a 4% growth over the prior year.
Milacron continues to work on supply chain efforts to more effectively offset higher input cost. It remains behind schedule in realizing savings in the European plant consolidation. These inefficiencies resulted from high order rates in Europe that delayed ongoing plant consolidation efforts in the region as the company had to manufacture in both locations. This, along with higher input costs will affect results in the to-be-reported quarter.
Further, pricing pressure remains a headwind in the APPT segment due to the combination of competition, low-growth environment in North America and broader commodity deflationary headwinds.
Additionally, Milacron has a substantial debt to capital ratio of 65% at the end of the third quarter. Subsequently, higher interest expense will hurt margins.
The Zacks Consensus Estimate for the fourth quarter is 39 cents, a 17% decline from the 47 cents reported in the prior-year quarter.
Earnings Whispers
Our proven model shows that Milacron is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold) for this to happen.
Zacks ESP: The Earnings ESP for Milacron is +1.52%. This is because the Most Accurate estimate of 40 cents is pegged higher than the Zacks Consensus Estimate of 39 cents. A favorable Earnings ESP serves as a meaningful and leading indicator of a likely positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Milacron currently carries a Zacks Rank #3. It should be noted that stocks with a Zacks Rank #1, 2 or 3 have a significantly higher chance of beating earnings.
Conversely, stocks with a Zacks Rank #4 or 5 (Sell rated) should never be considered going into an earnings announcement.
The combination of Milacron’s Zacks Rank #3 and Earnings ESP of +1.52% makes us reasonably confident of a likely earnings beat.
Share Price Performance
Milacron has outperformed the industry in the past six months. The company’s shares gained around 22% compared with 20% growth recorded by the industry.
Other Stocks That Warrant a Look
Here are some other companies you may want to consider as our model shows that these too have the right combination of elements to post an earnings beat this quarter:
MasTec, Inc. (MTZ - Free Report) has an Earnings ESP of +3.10% and a Zacks Rank #2. Its shares have gone up 31% over the past six months.
The Earnings ESP for Cintas Corporation (CTAS - Free Report) is +1.04%. It carries a Zacks Rank #2. Shares of Cintas have advanced 25% in the last six months.
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Milacron (MCRN) to Report Q4 Earnings: A Surprise in Store?
Milacron Holdings Corp. price-eps-surprise | Milacron Holdings Corp. Quote
Factors to Consider
Milacron recorded orders of $322 million in third-quarter 2017. In the first nine months of 2017, orders were up nearly 10%. This performance reflects continued strength in high-growth regions and a solid order book, both for Milacron’s injection and extrusion product lines going into 2018.
For the fourth quarter, the Zacks Consensus Estimate for sales is pegged at $303 million which projects growth of 5% over the $289 million in the prior-year quarter. The year–over-year improvement will be aided by continued orders and sales momentum along with strength in global markets, particularly in Asia and Europe and growth across all segments.
According to our latest consensus estimates, Milacron is anticipated to post net sales of $168 million for the fourth quarter in its Advanced Plastic Processing Technologies (“APPT”) segment, reflecting year–over-year growth of 5%. Further, our consensus estimates indicate that net sales of Melt Delivery and Control Systems will reach $106 million in the quarter, a projected year-over-year growth of 5%. The Zacks Consensus Estimate for Fluid Technologies is pegged at $29.7 million, a rise of 6% from the $28 million reported in the year-ago quarter.