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Can Joy Global Beat Analysts’ Revenue Estimates for Fiscal 2Q16?

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Joy Global’s fiscal 2Q16 revenue estimates

Joy Global (JOY) will release its fiscal 2Q16 earnings on June 2, 2016. The estimate for fiscal 2Q16 revenue is ~$605.6 million, which is 25.3% below fiscal 2Q15 revenue of $811.0 million. In JOY’s fiscal 2Q16 results, investors should closely look at order intake (in fiscal 1Q16, its orderbook stood at $897 million, up 2.7% quarter-over-quarter), organic revenue growth, capital expenditure, and dividend payout. Analysts will closely assess whether cost saving initiatives helped JOY to boost its profitability in fiscal 2Q16.

From January 1 to May 24, JOY rose 37.9%. In comparison, the Energy Select Sector SPDR Fund (XLE) rose ~10.2% over the same period.

JOY has missed analysts’ estimates for its quarterly revenues in four out of the last eight quarters.

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Understanding Joy Global’s revenue streams

JOY’s revenues can be broadly classified as coming from underground mining and surface mining. In fiscal 2015, underground mining and surface mining contributed 54% and 46%, respectively, to JOY’s consolidated revenues. The company largely serves the mining industry.

Joy Global’s peers

Caterpillar (CAT), Terex (TEX), and Illinois Tool Works (ITW) are some of JOY’s peers in the mining equipment space. However, they can’t be strictly compared to other companies due to diversified product base and revenue streams.

CAT expects its 2Q16 revenue to be $10.1 billion, up 17.9% when compared to 2Q15 revenue. TEX expects its 2Q16 revenue to be 11.7% lower than 2Q15 revenue at $1.6 billion. ITW expects its 2Q16 revenue to be $3.4 billion, 0.5% lower than 2Q15 revenue.

In the next part of this series, we’ll look at analysts’ recommendations for Joy Global’s earnings per share in fiscal 2Q16.

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