The Thermon Group (THR) reports a loss in the first quarter, ignores revenue estimates

Thermon Group (THR) reported quarterly loss of $0.11 per share versus the Zacks Consensus Estimate of a loss of $0.07. For comparison, a year earlier earnings per share were $0.15. These numbers have been adjusted for one-off items.

This quarterly report represents an earnings surprise of -57.14%. A quarter ago, it was expected that this maker of heating products would post earnings of $0.03 per share when it actually produced earnings of $0.01, delivering a surprise of -66.67%.

Over the last four quarters, the company has surpassed consensus EPS estimates only once.

The Thermon Group, which belongs to the Zacks Instruments – Control industry, posted revenues of $56.85 million for the quarter ended June 2020, missing the Zacks Consensus Estimate by 4.63%. For comparison, revenues from a year ago amounted to $91.71 million. The company has topped consensus revenue estimates twice over the last four quarters.

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

Thermon Group shares have lost approximately 45.5% since the beginning of the year compared to the S&P 500 Index’s gain of 3%.

What’s next for Thermo Group?

Although The Thermon Group has underperformed the market this year, the question that arises for investors is: what’s next for the shares?

There are no simple answers to this key question, but one reliable measure that can help investors address this issue is the company’s earnings prospects. 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.

Prior to the earnings release, estimate revision trends for Thermon Group were mixed. While the magnitude and direction of estimate revisions may change following the company’s just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) stock. Therefore, the company’s stock is 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 next quarters and the current fiscal year change in the coming days. The current consensus EPS estimate is $0.08 on revenue of $72.06 million for the coming quarter and $0.50 on revenue of $302.18 million for the current fiscal year.

Investors should be aware that the outlook for the industry may also have a significant impact on share prices. In terms of the Zacks Industry Rank, Instruments – Control is currently in the bottom 9% of over 250 Zacks industries. Our research shows that the top 50% of Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

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