Diversified conglomerate United Technologies Corp. (UTX) is scheduled to report its fourth-quarter and full year 2013 results before the opening bell on Jan 22. In the last reported quarter, United Technologies’ earnings beat the Zacks Consensus Estimate by a couple of cents. Let’s see how things are shaping up for this announcement.
Growth Factors
United Technologies expects to record a solid performance in 2013 having diligently executed its operating plans. A strong order backlog and modest strides in the global economy have given an added confidence to United Technologies. The company expects this growth to continue into 2014 with positive results, though tempered, across most of its businesses.
In an analyst meeting in December, United Technologies reiterated its revenue expectation for 2013 at $63 billion. The company further stressed that its earnings for the year will come in at $6.15 per share, which is at the high end of its previously issued earnings guidance of $6.10–$6.15. The current Zacks Consensus Estimate for 2013 is pegged at $6.16.
Management also noted that United Technologies has largely benefited from two global trends, namely, increased urbanization and a spurt in the commercial airline industry. However, in the same breath, management admitted that the company’s military business could be adversely affected, albeit at a lesser pace than 2013, with spending cuts on federal projects as part of the U.S. government’s sequestration program.
Earnings Whispers?
Our proven model shows that United Technologies is likely to beat earnings because it has the right combination of two key ingredients.
Positive Zacks ESP: Expected Surprise Prediction or ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is at +3.27%. This is a meaningful and leading indicator of a likely positive earnings surprise for the shares.
Zacks Rank #3 (Hold): United Technologies’ Zacks Rank #3 increases the predictive power of ESP. Note that stocks with Zacks Ranks of #1, #2 and #3 have a significantly higher chance of beating earnings. The Sell rated stocks (#4 and #5) should never be considered going into an earnings announcement.
Other Stocks to Consider
Here are some other companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Cablevision Systems Corporation (CVC), earnings ESP of +77.78% and Zacks Rank #1 (Strong Buy).
Genco Shipping & Trading Ltd. (GNK), earnings ESP of +54.90% and Zacks Rank #1 (Strong Buy).
Trinity Industries Inc. (TRN), earnings ESP of +2.11% and Zacks Rank #1 (Strong Buy).
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