Joy Global Inc. (NYSE:JOY) is set to report FQ2 2014 earnings before the market opens on Thursday, June 4th. Joy Global is a mining equipment company that has had slumping earnings in recent quarters. Shareholders are expecting another big drop on Thursday as Wall Street is predicting Joy’s FQ3 earnings will fall by 70c per share compared to last year, while revenue plunges 27%. Slack in the metal commodities markets have kept the purse strings of Joy Global’s customers tight, and the expectations are low this quarter. Here’s what investors are expecting from Joy Global on Thursday.
The information below is derived from data submitted to the Estimize.com platform by a set of Buy Side and Independent analyst contributors.
The current Wall Street consensus expectation is for Joy Global to report 70c EPS and $924.20M revenue, while the current Estimize.com consensus from 17 Buy Side and Independent contributing analysts is 72c EPS and $930.24M in revenue. This quarter, the buy-side as represented by the Estimize.com community is expecting Joy Global to beat the Wall Street consensus on both the top and bottom line by a small margin.
Over the previous 6 quarters, the consensus from Estimize.com has been more accurate than Wall Street in forecasting Joy Global’s EPS and revenue 4 and 5 times, respectively. By tapping into a wider range of contributors including hedge-fund analysts, asset managers, independent research shops, students, and non-professional investors, Estimize has created a data set that is more accurate than Wall Street up to 69.5% of the time.
More importantly, it does a better job of representing the market’s actual expectations. It has been confirmed by Deutsche Bank (NYSE:DB) Quant. Research and an independent academic study from Rice University that stock prices tend to react with a more strongly associated degree to the expectation benchmark from Estimize than from the Wall Street consensus.
The magnitude of the difference between the Wall Street and Estimize consensus numbers often identifies opportunities to take advantage of expectations that may not have been priced into the market. Here we are seeing a smaller than usual differential between the two groups’ expectations compared to recent quarters.
The distribution of earnings estimates published by analysts on the Estimize.com platform range from 65c to 88c per share and from $905.00M to $993.00M in revenues. This quarter, we’re seeing a relatively large range of estimates for Joy Global’s earnings.
The size of the distribution of estimates relative to previous quarters often signals whether or not the market is confident that it has priced in the expected earnings already. A wide range of estimates signals less agreement in the market, which could mean greater volatility post earnings.
Throughout the quarter, the Wall Street EPS consensus fell from 90c to 70c, while the Estimize consensus slipped from 83c to 72c. Meanwhile, the Wall Street revenue consensus declined from $955.65M to $924.20M, while the Estimize consensus increased from a low of $921.65M to $930.24M before the report. Timeliness is correlated with accuracy and the directionality of analyst revisions are often a leading indicator, however, in this case analyst estimate revisions were mostly flat going into the report.
The analyst with the highest estimate confidence rating this quarter is tminn65, who projects 68c EPS and $910.20M in revenue. tminn65 self indentifies as an independent research financial professional, and is ranked 189th overall among over 4,500 contributing analysts. Over the past 2 years, tminn65 has been more accurate than Wall Street in forecasting EPS and revenue 54% and 61% of the time, respectively, throughout 28 estimates.
Estimate confidence ratings are calculated through algorithms developed by deep quantitative research, which looks at correlations between analyst track records and tendencies as they relate to future accuracy. In this case, tminn65 is making a bearish call, expecting Joy Global to miss the Estimize consensus by 4c on earnings and $20 million on sales.
The expectations for Joy Global are significantly lower than usual this quarter. Shares of JOY have held up okay this year in large part because the bar was already set fairly low for this quarter. On Thursday, contributing analysts on the Estimize.com platform are predicting that Joy Global will edge past the low consensus from Wall Street on both EPS and revenue by a thin margin.