Industrial goods manufacturer Ingersoll-Rand Plc (IR) is scheduled to report fourth-quarter and full-year 2014 results before the opening bell on Jan 30. In the last reported quarter, Ingersoll’s adjusted earnings beat the Zacks Consensus Estimate by 6 cents, making it the fourth consecutive quarterly earnings surprise for the company. Let’s see how things are shaping up for this announcement.

Key Factors in the Fourth Quarter

Ingersoll-Rand recently completed the acquisition of the assets of Cameron International Corporation’s Centrifugal Compression division for $850 million. Ingersoll’s compressed air systems and services business provides a wide range of centrifugal, reciprocating and rotary air compressor products and this acquisition will further expand its existing portfolio. Post acquisition, the Turbo-Air and MSG brands of Cameron International’s Centrifugal Compression division will be added to Ingersoll’s line-up and boost its compression unit offerings.

Ingersoll expects to achieve steady improvements in operating profitability by consistently investing in new products and technologies. The transaction will expand Ingersoll’s industrial segment into areas such as air separation, petrochemical, chemical, and process gas and fast-growing power generation applications. This acquisition is a strategic fit for the company and is likely to be accretive to its earnings.

At the same time, Ingersoll continues to focus on its strategic priorities, which include a disciplined capital allocation; strong and flexible balance sheet position; and cash flows enhancement to support dividend growth. The structural changes in the company are further expected to unlock additional value. We believe that such moves along with its robust operating platform and an efficient management team will help in the execution of these strategic priorities and drive net asset value and dividend growth in the future as well.

Earnings Whispers

Despite earning some brownie points, our proven model does not conclusively show that Ingersoll is likely to beat earnings this quarter as it lacks the key ingredients for a success recipe.

Zacks ESP: Expected Surprise Prediction or Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is currently pegged at 0.00%. This indicates a likely in line earnings.

Zacks Rank: Ingersoll’s Zacks Rank #3 (Hold) combined with a 0.00% ESP reduces the predictive power of an earnings beat for the company. Note that stocks with a Zacks Ranks of #1(Strong Buy), #2 (Buy) and #3 coupled with a positive ESP have a significantly higher chance of beating earnings. The Sell rated stocks (#4 and #5) should never be considered going into an earnings announcement.  

Other Stocks to Consider

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

Kemper Corporation (KMPR), earnings ESP of +2.78% and a Zacks Rank #3.

The Kroger Co. (KR), earnings ESP of +2.27% and a Zacks Rank #2.

Arch Capital Group Ltd. (ACGL) earnings ESP of +1.92% and Zacks Rank #1.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
KROGER CO (KR): Free Stock Analysis Report
 
INGERSOLL RAND (IR): Free Stock Analysis Report
 
ARCH CAP GP LTD (ACGL): Free Stock Analysis Report
 
KEMPER CORP (KMPR): Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research