Harris Corporation (HRS), a leading supplier of communications equipment and services, is scheduled to report its second-quarter fiscal 2014 results on Jan 28, before the market opens. In the previous quarter the company reported a 4.42% earnings surprise. Let’s see how things are shaping up for this announcement.
Why a Likely Positive Surprise?
Our proven model shows that Harris is likely to beat earnings because it has the right combination of two key ingredients.
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, stands at +2.56% for Harris. This is a meaningful and leading indicator of a likely positive earnings surprise.
Zacks Rank: Harris currently has a Zacks Rank #3 (Hold). Note that stocks with Zacks Rank of #1 (Strong Buy), 2 (Buy) or 3 (Hold) have a significantly higher chance of beating earnings.
The combination of Harris’ Zacks Rank #3 and +2.56% ESP makes us confident of positive earnings beat this release.
What is Driving the Better-Than-Expected Earnings?
We expect Harris to deliver improved results this quarter as the company’s RF Communications segment is gaining traction in international markets. This momentum is likely to continue since Harris’ next-generation Falcon III tactical radio is gaining popularity. The company has received $234 million worth of tactical radio contracts globally in the past few months.
Moreover, the acquisition of CapRock Communications gives Harris a strong foothold in the lucrative energy market. Notably, the company has been selected as one of the 20 contractors to compete for work under the Global Tactical Advanced Communications Systems contract initiated by the U.S. Army’s Program Executive Office-Command Communications and Control.
Other Stocks to Consider
Here are some other companies to consider as our model shows these have the right combination of elements to post an earnings beat this quarter:
Nokia Corp. (NOK) with earnings ESP of +33.33% and Zacks Rank #1 (Strong Buy).
Polycom Inc. (PLCM) with earnings ESP of +40.00% and Zacks Rank #1 (Strong Buy).
Embraer SA (ERJ) with earnings ESP of +14.41% and Zacks Rank #2 (Buy).
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