Q3 Earnings Preview for Barnes (NYSE:B)

in EARNINGS/INVESTING IDEAS by

Barnes Group Inc. (NYSE:B) is scheduled to report Q3 earnings results before markets open for trading on October 23, 2020.

The company is expected to report earnings of $0.27/share on revenue of $245.6 million. The consensus earnings per share (EPS) of $0.27/share is based on a poll of 5 analysts and represents a decline in eps of −69.5% over the same quarter last year, when the company reported earnings of $0.89/share.

The revenue forecast of $245.6 million based on a poll of 5 analysts implies a year-over-year (YoY) decline in revenue of −34.1%. Last year the company reported $372.6 million in revenue for the quarter.

Expected to report EPS contraction of −69.5% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $245.55 $372.59 −34.1%
EPS $0.27 $0.89 −69.5%

Earnings Call Trends

Historically, management has exceeded analyst expectations 6 out of the last 8 tracked quarters, and missed expectations 2 quarters.

What are your expectations from Barnes Group Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.20 $0.27 36.3% Beat
Q1, 2020 $0.50 $0.71 42.3% Beat
Q4, 2019 $0.84 $0.86 2.8% Beat
Q3, 2019 $0.79 $0.89 13.4% Beat
Q2, 2019 $0.78 $0.75 −3.3% Missed
Q1, 2019 $0.69 $0.71 3.0% Beat
Q4, 2018 $0.82 $0.84 2.5% Beat
Q3, 2018 $0.81 $0.78 −3.6% Missed

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price did not react much to the update.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
July 28, 2020 $37.90 $37.88 −0.1% Decline
April 24, 2020 $37.57 $36.71 −2.3% Decline
February 21, 2020 $66.40 $66.28 −0.2% Decline
October 25, 2019 $52.83 $59.44 12.5% Increase

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.99, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.99 implies a 0.1% chance of earnings manipulation.

Fundamentals And Technical Analysis

Barnes Group Inc. is currently trading at $39.43/share, down −1.9% for the day. The company is trading at approximately 57.5% of its 52-week high of $68.60/share. The company’s stock price is up 4.1% since the last earnings report and up 2.4% over the previous week.

The company’s 14 Day Relative Price Index (RSI) of 57.81 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:B Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 17.02 and a forward P/E multiple of 24.48.

Barnes Group Inc.’s current share price also implies a price-to-book (P/B) multiple of 1.58. The following table summarizes some other key fundamental ratios:

Data as of October 20, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $39.43
P/E Ratio 17.0x
P/E Ratio (Fwd) 24.5x
PEG Ratio −0.8
Total Debt / Total Capital 26.1%
Levered Free Cash Flow $215.6 million
EV / EBITDA 9.1x

Finbox

Barnes Group Inc. is a small-cap stock with a market capitalization of $1.992 billion and a total enterprise value of $2.64 billion. The company operates in the Industrials sector and the Machinery industry.

Barnes Group Inc. provides engineered products, industrial technologies, and innovative solutions in the United States and internationally. The company operates through two segments: Industrial and Aerospace. The Industrial segment offers precision components, products, and systems used by various customers in end-markets, such as transportation, industrial equipment, automation, personal care, packaging, electronics, and medical devices. This segment also designs and manufactures hot runner systems, mold cavity sensors and process control systems, and precision high cavitation mold assemblies for injection molding applications; provides force and motion control solutions for various metal forming and other industrial markets; and designs and develops robotic grippers, end-of-arm tooling systems, sensors, and other automation components for intelligent robotic handling solutions and industrial automation applications. In addition, it manufactures and supplies precision mechanical products, including mechanical springs, and high-precision punched and fine-blanked components used in transportation and industrial applications, including mechanical springs, and high-precision punched and fine-blanked components. This segment sells its products primarily through its direct sales force and distribution channels. The Aerospace segment produces fabricated and precision machined components and assemblies turbine engines; and nacelles, and structures for commercial and military aircrafts. It also provides aircraft engine component maintenance, repair, and overhaul services for turbine engine manufacturers, commercial airlines, and the military; and manufactures and delivers aerospace aftermarket spare parts. This segment primarily serves original equipment manufacturing industry. Barnes Group Inc. was founded in 1857 and is based in Bristol, Connecticut.

Expertise: financial modeling, mergers & acquisitions. Andy is also a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to do investment research. Andy’s background is in investment banking where he led the analysis on over 50 board advisory engagements involving mergers and acquisitions, fairness opinions and solvency opinions. Some of his board advisory highlights: - Sears Holdings Corp.’s $620 mm spin-off via rights offering of Sears Outlet, Hometown Stores and Sears Hardware Stores. - Cerberus Capital Management’s $3.3 bn acquisition of SUPERVALU Inc.’s New Albertsons, Inc. assets. Andy can be reached at andy@finbox.io or at +1 (516) 778-6257.

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