ESCO Technologies Earnings Preview

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Investors are on the edge of their collective seats, hoping that ESCO Technologies (NYS: ESE) will top analyst expectations for the fifth consecutive quarter. The company will unveil its latest earnings Tuesday. ESCO Technologies is a producer of engineered products and systems sold to customers worldwide. It operates in three operating segments: utility solutions, test, and filtration/fluid flow.

What analysts say:

  • Buy, sell, or hold?: Analysts strongly back ESCO Technologies, with eight of 12 rating it a buy and the remainder rating it a hold. Analysts don't like ESCO Technologies as much as competitor Cognex overall. Wall Street has warmed to the stock over the past three months, with analysts increasing their endorsement from hold to moderate buy.
  • Revenue forecasts: On average, analysts predict $171.5 million in revenue this quarter. That would represent a rise of 8.8% from the year-ago quarter.
  • Wall Street earnings expectations: The average analyst estimate is earnings of $0.45 per share. Estimates range from $0.39 to $0.56.

What our community says:
CAPS All-Stars are solidly behind the stock with 90.9% giving it an "outperform" rating. The community at large agrees with the All-Stars with 88.9% assigning it a rating of "outperform." Fools are keen on ESCO Technologies, though the message boards have been quiet lately with only 23 posts in the past 30 days. Despite the majority sentiment in favor of ESCO Technologies, the stock has a middling CAPS rating of three out of five stars.

Management:
ESCO Technologies' profit has risen year over year by an average of more than sevenfold. Revenue has now gone up for three straight quarters. The company increased its gross margin by 2.3 percentage points in the last quarter. Revenue rose 29% while cost of sales rose 24.2% to $98.6 million from a year earlier.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and net margins over the past four quarters.

Quarter

Q2

Q1

Q4

Q3

Gross Margin

40.9%

39.0%

40.8%

41.6%

Operating Margin

13.0%

10.0%

15.3%

15.6%

Net Margin

7.9%

6.8%

11.5%

9.2%

For all our ESCO Technologies-specific analysis, including earnings and beyond, add ESCO Technologies to My Watchlist.

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At the time this article was published

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