Core & Main (CNM) Stock Sinks As Market Gains: Here's Why

Kennametal (KMT) came out with quarterly earnings of $0.29 per share, beating the Zacks Consensus Estimate of $0.25 per share. This compares to earnings of $0.41 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents an earnings surprise of 16%. A quarter ago, it was expected that this engineered products maker would post earnings of $0.44 per share when it actually produced earnings of $0.49, delivering a surprise of 11.36%.

Over the last four quarters, the company has surpassed consensus EPS estimates three times.

Kennametal, which belongs to the Zacks Manufacturing - Tools & Related Products industry, posted revenues of $481.95 million for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 0.26%. This compares to year-ago revenues of $492.48 million. The company has topped consensus revenue estimates three times over the last four quarters.

The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call.

Kennametal shares have added about 3.1% since the beginning of the year versus the S&P 500's gain of 21.2%.

What's Next for Kennametal?

While Kennametal has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock?

There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Ahead of this earnings release, the estimate revisions trend for Kennametal: unfavorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #5 (Strong Sell) for the stock. So, the shares are expected to underperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how estimates for the coming quarters and current fiscal year change in the days ahead. The current consensus EPS estimate is $0.26 on $484.03 million in revenues for the coming quarter and $1.43 on $2.03 billion in revenues for the current fiscal year.

Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Manufacturing - Tools & Related Products is currently in the bottom 9% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

One other stock from the same industry, Core & Main (CNM), is yet to report results for the quarter ended October 2024.

This distributor of water and fire protection products is expected to post quarterly earnings of $0.65 per share in its upcoming report, which represents no change from the year-ago quarter. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days.

Core & Main's revenues are expected to be $2 billion, up 9.5% from the year-ago quarter.

Zacks Investment Research

Core & Main (CNM) closed the most recent trading day at $43.58, moving +0.76% from the previous trading session. The stock outperformed the S&P 500, which registered a daily loss of 0.28%. Elsewhere, the Dow saw a downswing of 0.61%, while the tech-heavy Nasdaq depreciated by 0.33%.

Coming into today, shares of the distributor of water and fire protection products had gained 0.51% in the past month. In that same time, the Industrial Products sector lost 0.73%, while the S&P 500 gained 0.41%.

Market participants will be closely following the financial results of Core & Main in its upcoming release. The company is expected to report EPS of $0.65, unchanged from the prior-year quarter. In the meantime, our current consensus estimate forecasts the revenue to be $2 billion, indicating a 9.51% growth compared to the corresponding quarter of the prior year.

For the full year, the Zacks Consensus Estimates are projecting earnings of $2.10 per share and revenue of $7.32 billion, which would represent changes of -2.33% and +9.21%, respectively, from the prior year.

Investors should also note any recent changes to analyst estimates for Core & Main. These revisions help to show the ever-changing nature of near-term business trends. Consequently, upward revisions in estimates express analysts' positivity towards the company's business operations and its ability to generate profits.

Our research shows that these estimate changes are directly correlated with near-term stock prices. To capitalize on this, we've crafted the Zacks Rank, a unique model that incorporates these estimate changes and offers a practical rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. The Zacks Consensus EPS estimate remained stagnant within the past month. Core & Main is currently a Zacks Rank #5 (Strong Sell).

With respect to valuation, Core & Main is currently being traded at a Forward P/E ratio of 20.63. This valuation marks a discount compared to its industry's average Forward P/E of 22.66.

It is also worth noting that CNM currently has a PEG ratio of 2.81. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Manufacturing - Tools & Related Products was holding an average PEG ratio of 2.67 at yesterday's closing price.

The Manufacturing - Tools & Related Products industry is part of the Industrial Products sector. At present, this industry carries a Zacks Industry Rank of 247, placing it within the bottom 2% of over 250 industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Zacks Investment Research

Century Aluminum (CENX) came out with quarterly earnings of $0.46 per share, beating the Zacks Consensus Estimate of $0.32 per share. This compares to loss of $0.13 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents an earnings surprise of 43.75%. A quarter ago, it was expected that this aluminum producer would post earnings of $0.02 per share when it actually produced a loss of $0.03, delivering a surprise of -250%.

Over the last four quarters, the company has surpassed consensus EPS estimates two times.

Century, which belongs to the Zacks Metal Products - Procurement and Fabrication industry, posted revenues of $539.1 million for the quarter ended September 2024, missing the Zacks Consensus Estimate by 8.18%. This compares to year-ago revenues of $545.2 million. The company has topped consensus revenue estimates just once over the last four quarters.

The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call.

Century shares have added about 41.9% since the beginning of the year versus the S&P 500's gain of 20.1%.

What's Next for Century?

While Century has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock?

There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Ahead of this earnings release, the estimate revisions trend for Century: mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how estimates for the coming quarters and current fiscal year change in the days ahead. The current consensus EPS estimate is -$0.11 on $553.1 million in revenues for the coming quarter and $2.55 on $2.19 billion in revenues for the current fiscal year.

Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Metal Products - Procurement and Fabrication is currently in the bottom 32% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

One other stock from the broader Zacks Industrial Products sector, Core & Main (CNM), is yet to report results for the quarter ended October 2024.

This distributor of water and fire protection products is expected to post quarterly earnings of $0.65 per share in its upcoming report, which represents no change from the year-ago quarter. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days.

Core & Main's revenues are expected to be $2 billion, up 9.5% from the year-ago quarter.

Zacks Investment Research