Can Chicago Bridge (CBI) Surprise This Earnings Season? - Analyst Blog
22 April 2014 - 7:00PM
Zacks
We expect engineering, procurement and construction service
provider Chicago Bridge & Iron (CBI) to beat
expectations when it reports first-quarter 2014 results on Apr 23,
2014.
Why a Likely Positive Surprise?
Our proven model shows that CBI is likely to beat earnings
because it has the right combination of two key ingredients.
Positive Zacks ESP: Earnings Surprise
Prediction or Earnings ESP, which represents the difference between
the Most Accurate estimate and the Zacks Consensus Estimate, is at
+5.36%. This is very meaningful and a leading indicator of a likely
positive earnings surprise for shares.
Zacks Rank #3 (Hold): Note that stocks with
Zacks Ranks #1, 2 and 3 have a significantly higher chance of
beating earnings. Sell-rated stocks (#4 and #5) should never be
considered going into an earnings announcement.
The combination of CBI’s Zacks Rank #3 and +5.36% ESP makes us
very confident in looking for a positive earnings beat this
quarter.
What is Driving the Better Than Expected
Earnings?
CBI’s diligent operational execution, focus on safety and unique
business model are the key drivers behind the its growth. CBI is
benefiting from rising demand worldwide for energy infrastructure,
especially in the LNG, gas processing and oil sands markets.
Exiting the year, the company had a strong backlog driven by
significant new order wins. CBI is very positive about increasing
orders in the LNG division, especially for LNG/low temperature
storage systems (petrochemicals).
The positive trend is seen in the trailing four-quarter average
surprise of 9.03%, which was greatly helped by the 2.6% surprise in
the last-reported quarter. This was possible because CBI reported
healthy revenue growth across all the three legacy business
units.
Other Stocks to Consider
CBI is not the only firm looking up this earnings season. We
also see likely earnings beats coming from these 3 industry
peers:
NRG Yield, Inc. (NYLD), Earnings ESP of +43.75%
and Zacks Rank #1 (Strong Buy).
Atlantic Power Corporation (AT), Earnings ESP
of +80.95% and Zacks Rank #2 (Buy).
Chesapeake Utilities Corporation (CPK),
Earnings ESP of +0.63% and Zacks Rank #2.
ATLANTIC PWR CP (AT): Free Stock Analysis Report
CHICAGO BRIDGE (CBI): Free Stock Analysis Report
CHESAPEAKE UTIL (CPK): Free Stock Analysis Report
NRG YIELD INC-A (NYLD): Free Stock Analysis Report
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