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LEG, MHK Q3 Earnings on Oct 25: Here are the Key Predictions
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The Q3 reporting cycle is gathering steam, with more than 600 companies (including 154 S&P 500 members) on deck to report results this week. According to the latest Earnings Preview, results of 84 S&P 500 members are already out. As of Oct 19, 2018, total earnings for these S&P 500 members were up 19.2% year over year on 8.4% higher revenues. Of these, 82.1% surpassed earnings estimates, while 61.9% beat revenue expectations.
Putting together the results so far and forward expectations, total earnings for the S&P 500 companies are estimated to improve 19.2% on 7.2% increase in revenues. Although third quarter is expected to register strong growth, the pace is somewhat slower that what we saw in the first half of the year.
The performance of the index is determined by all the 16 Zacks sectors, out of which, 14 are estimated to record year-over-year earnings growth. Notably, 10 of the 16 Zacks sectors are expected to record double-digit earnings growth on a year-over-year basis.
A Glimpse of Consumer Discretionary Sector
The Consumer Discretionary sector mainly houses major media stocks, furniture, home furnishing, leisure & recreation service providers, schools, gaming, household appliances, and more. Per the report, the Consumer Discretionary sector is likely to witness earnings growth of 9.3% and an 8% increase in revenues this earnings season.
Let’s find out what awaits the two stocks from the sector that are queued up for third-quarter 2018 earnings releases on Oct 25.
Our research shows that stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) coupled with a positive Earnings ESP have higher chances of delivering a positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Key Predictions for LEG and MHK
Leggett & Platt Inc. (LEG - Free Report) , the producer and seller of furniture and other engineered goods for office and home, is scheduled to report quarterly numbers after the closing bell. In the last reported quarter, the company’s earnings surpassed the Zacks Consensus Estimate by a margin of 3.3%. However, it lagged expectations in two of the trailing four quarters, with the average miss being 1.6%.
Leggett’s third-quarter 2018 results are likely to be driven by an increase in raw material price inflation and currency, alongside a rise in volume. The company has been experiencing higher sales, as is evident from its 9.3% year-over-year net sales growth in the first six months of 2018.
The company’s long-term strategic plan also bodes well. It has successfully completed the first two parts of its strategic plan. While the first part was to divest low-performing businesses, the second part comprised an improvement in margins and returns. The company is now working on the third part of the plan that aims to achieve annual top-line growth of 4-5%.
Furthermore, acquisitions contributed around 3% and 2% to sales in the second and first quarter, respectively. The company’s 2018 sales view was backed by expectation of mid-single-digit volume growth, raw material price increases and favorable currency. Additionally, the PHC acquisition is likely to contribute 2% to sales growth.
That said, margin in the quarter will continue to be impacted by commodity and steel cost inflation.
Overall, the Zacks Consensus Estimate for third-quarter earnings of 72 cents implies year-over-year growth of 18%. The same for revenues is pegged at $1.1 billion, 9.2% higher than the prior-year figure.
Meanwhile, our proven model hints at an earnings beat for the company in the to-be-reported quarter, as Leggett has an Earnings ESP of +1.04% and Zacks Rank #3.
Mohawk Industries, Inc. (MHK - Free Report) , the leading global manufacturer of flooring products, is slated to report quarterly numbers after the closing bell. In the last reported quarter, the company’s earnings and revenues missed the Zacks Consensus Estimate by 9.5% and 0.04%, respectively. It beat earnings estimates in two and met expectations in one of the past four quarters, with an average negative surprise of 1.6%.
Rising material costs have been impacting the company’s carpet business in the United States. Again, labor, energy and fuel-related costs have been negatively impacting its results. In the first six months of 2018, cost of sales grew more than 9%, pressurizing gross profit margins by 174 basis points.
Considering the above-mentioned headwinds, it expects third-quarter earnings (excluding one-time charges) in the range of $3.54-$3.64 per share, lower than the prior-year profit level of $3.75 per share. The Zacks Consensus Estimate for earnings is pegged at $3.59, reflecting a 4.3% year-over-year decline.
Meanwhile, in a bid to reduce the effect of higher input costs, Mohawk has planned to undertake a comprehensive approach to improve its performance and profitability in the United States. The company expects to increase pricing, improve sales in growing channels and reduce cost, which is expected to aid the second half of 2018.
The introduction of innovative products across its portfolio is also expected to improve overall sales. The company holds a dominant market share in the hugely fragmented and competitive industry. In addition, it commands a competitive advantage in the laminate flooring channel, backed by the Laminate and Wood segment’s industry-leading design, patented technologies and brands.
Overall, the consensus estimate for total revenues is pegged at $2.61 billion, reflecting a 6.8% year-over-year increase.
Meanwhile, per our proven model, Mohawk does not have the right combination of the two key ingredients to increase the odds of an earnings beat. Currently, the company has a Zacks Rank #4 (Sell) and an Earnings ESP of -0.20%. It is to be noted that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is witnessing negative estimate revisions. You can see the complete list of today’s Zacks #1 Rank stocks here.
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Image: Bigstock
LEG, MHK Q3 Earnings on Oct 25: Here are the Key Predictions
The Q3 reporting cycle is gathering steam, with more than 600 companies (including 154 S&P 500 members) on deck to report results this week. According to the latest Earnings Preview, results of 84 S&P 500 members are already out. As of Oct 19, 2018, total earnings for these S&P 500 members were up 19.2% year over year on 8.4% higher revenues. Of these, 82.1% surpassed earnings estimates, while 61.9% beat revenue expectations.
Putting together the results so far and forward expectations, total earnings for the S&P 500 companies are estimated to improve 19.2% on 7.2% increase in revenues. Although third quarter is expected to register strong growth, the pace is somewhat slower that what we saw in the first half of the year.
The performance of the index is determined by all the 16 Zacks sectors, out of which, 14 are estimated to record year-over-year earnings growth. Notably, 10 of the 16 Zacks sectors are expected to record double-digit earnings growth on a year-over-year basis.
A Glimpse of Consumer Discretionary Sector
The Consumer Discretionary sector mainly houses major media stocks, furniture, home furnishing, leisure & recreation service providers, schools, gaming, household appliances, and more. Per the report, the Consumer Discretionary sector is likely to witness earnings growth of 9.3% and an 8% increase in revenues this earnings season.
Let’s find out what awaits the two stocks from the sector that are queued up for third-quarter 2018 earnings releases on Oct 25.
Our research shows that stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) coupled with a positive Earnings ESP have higher chances of delivering a positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Key Predictions for LEG and MHK
Leggett & Platt Inc. (LEG - Free Report) , the producer and seller of furniture and other engineered goods for office and home, is scheduled to report quarterly numbers after the closing bell. In the last reported quarter, the company’s earnings surpassed the Zacks Consensus Estimate by a margin of 3.3%. However, it lagged expectations in two of the trailing four quarters, with the average miss being 1.6%.
Leggett’s third-quarter 2018 results are likely to be driven by an increase in raw material price inflation and currency, alongside a rise in volume. The company has been experiencing higher sales, as is evident from its 9.3% year-over-year net sales growth in the first six months of 2018.
The company’s long-term strategic plan also bodes well. It has successfully completed the first two parts of its strategic plan. While the first part was to divest low-performing businesses, the second part comprised an improvement in margins and returns. The company is now working on the third part of the plan that aims to achieve annual top-line growth of 4-5%.
Furthermore, acquisitions contributed around 3% and 2% to sales in the second and first quarter, respectively. The company’s 2018 sales view was backed by expectation of mid-single-digit volume growth, raw material price increases and favorable currency. Additionally, the PHC acquisition is likely to contribute 2% to sales growth.
That said, margin in the quarter will continue to be impacted by commodity and steel cost inflation.
Overall, the Zacks Consensus Estimate for third-quarter earnings of 72 cents implies year-over-year growth of 18%. The same for revenues is pegged at $1.1 billion, 9.2% higher than the prior-year figure.
Meanwhile, our proven model hints at an earnings beat for the company in the to-be-reported quarter, as Leggett has an Earnings ESP of +1.04% and Zacks Rank #3.
(Read: Factors Setting the Tone for Leggett's Earnings in Q3)
Leggett & Platt, Incorporated Price and EPS Surprise
Leggett & Platt, Incorporated Price and EPS Surprise | Leggett & Platt, Incorporated Quote
Mohawk Industries, Inc. (MHK - Free Report) , the leading global manufacturer of flooring products, is slated to report quarterly numbers after the closing bell. In the last reported quarter, the company’s earnings and revenues missed the Zacks Consensus Estimate by 9.5% and 0.04%, respectively. It beat earnings estimates in two and met expectations in one of the past four quarters, with an average negative surprise of 1.6%.
Rising material costs have been impacting the company’s carpet business in the United States. Again, labor, energy and fuel-related costs have been negatively impacting its results. In the first six months of 2018, cost of sales grew more than 9%, pressurizing gross profit margins by 174 basis points.
Considering the above-mentioned headwinds, it expects third-quarter earnings (excluding one-time charges) in the range of $3.54-$3.64 per share, lower than the prior-year profit level of $3.75 per share. The Zacks Consensus Estimate for earnings is pegged at $3.59, reflecting a 4.3% year-over-year decline.
Meanwhile, in a bid to reduce the effect of higher input costs, Mohawk has planned to undertake a comprehensive approach to improve its performance and profitability in the United States. The company expects to increase pricing, improve sales in growing channels and reduce cost, which is expected to aid the second half of 2018.
The introduction of innovative products across its portfolio is also expected to improve overall sales. The company holds a dominant market share in the hugely fragmented and competitive industry. In addition, it commands a competitive advantage in the laminate flooring channel, backed by the Laminate and Wood segment’s industry-leading design, patented technologies and brands.
Overall, the consensus estimate for total revenues is pegged at $2.61 billion, reflecting a 6.8% year-over-year increase.
Meanwhile, per our proven model, Mohawk does not have the right combination of the two key ingredients to increase the odds of an earnings beat. Currently, the company has a Zacks Rank #4 (Sell) and an Earnings ESP of -0.20%. It is to be noted that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is witnessing negative estimate revisions. You can see the complete list of today’s Zacks #1 Rank stocks here.
(Read: Rising Material Costs to Impact Mohawk's Q3 Earnings)
Mohawk Industries, Inc. Price and EPS Surprise
Mohawk Industries, Inc. Price and EPS Surprise | Mohawk Industries, Inc. Quote
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>