Can Chicago Bridge (CBI) Surprise This Earnings Season? - Analyst Blog

We expect engineering, procurement and construction service provider Chicago Bridge & Iron CBI to beat expectations when it reports first-quarter 2014 results on Apr 23, 2014.

Why a Likely Positive Surprise?

Our proven model shows that CBI is likely to beat earnings because it has the right combination of two key ingredients.

Positive Zacks ESP: Earnings Surprise Prediction or Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is at +5.36%. This is very meaningful and a leading indicator of a likely positive earnings surprise for shares.

Zacks Rank #3 (Hold): Note that stocks with Zacks Ranks #1, 2 and 3 have a significantly higher chance of beating earnings. Sell-rated stocks (#4 and #5) should never be considered going into an earnings announcement. 

The combination of CBI's Zacks Rank #3 and +5.36% ESP makes us very confident in looking for a positive earnings beat this quarter.

What is Driving the Better Than Expected Earnings?

CBI's diligent operational execution, focus on safety and unique business model are the key drivers behind the its growth. CBI is benefiting from rising demand worldwide for energy infrastructure, especially in the LNG, gas processing and oil sands markets. Exiting the year, the company had a strong backlog driven by significant new order wins. CBI is very positive about increasing orders in the LNG division, especially for LNG/low temperature storage systems (petrochemicals).

The positive trend is seen in the trailing four-quarter average surprise of 9.03%, which was greatly helped by the 2.6% surprise in the last-reported quarter. This was possible because CBI reported healthy revenue growth across all the three legacy business units.

Other Stocks to Consider

CBI is not the only firm looking up this earnings season. We also see likely earnings beats coming from these 3 industry peers:

NRG Yield, Inc. NYLD, Earnings ESP of +43.75% and Zacks Rank #1 (Strong Buy).

Atlantic Power Corporation AT, Earnings ESP of +80.95% and Zacks Rank #2 (Buy).

Chesapeake Utilities Corporation CPK, Earnings ESP of +0.63% and Zacks Rank #2.