Waters Corporation (WAT) is scheduled to report fourth-quarter 2014 results before the opening bell on Jan 27, 2015. Over the last four trailing quarters, the company reported a negative average earnings surprise of 0.72%. However, in third-quarter 2014, the company reported earnings of $1.38 per share, which surpassed the Zacks Consensus Estimate by 7.81%. Let’s see how things are shaping up prior to this announcement.
Factors to Influence Q4 Results
Waters Corporation is a premium medical instrument supplying firm in the global healthcare industry. In the current era, public and private authorities in modern market economies are constantly attempting to enhance the standard of their national healthcare facilities and services, so as to improve the level of overall economic development. This, in turn, supports growth and expansion of many prominent multinational companies in the world, such as Waters Corporation.
Strong demand for HPLC and mass spectrometry markets is expected to escalate the organic revenues of Waters Corporation in the upcoming quarters. Further, the company is making relentless efforts to expand its commerce through inorganic growth initiatives, driven by its strategic acquisitions. Also, the non-imitable technological expertise of the company facilitates it to expand market share in the industry.
However, Waters Corporation’s trade currently faces certain problems. The company generates a substantial portion of its revenues from non-U.S. markets. Therefore, currency volatility considerably impacts its revenues.
Besides, the company’s key technologies like HPLC, UPLC, MS, LC-MS, thermal analysis, rheometry and calorimetry product lines form part of a highly competitive industry, and hence, are subject to rapid changes in technology. Waters Corporation also faces competition from several international instrument manufacturers and other companies in both domestic and foreign markets.
At the same time, Waters Corporation is highly dependent on capital spending of government, academic and research institutions and any delay in its release can hinder its business. Fluctuations in these funds can hurt the ongoing research and development activities of the company.
Earnings Whispers
Our proven model does not conclusively show that Waters Corporation is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for an earnings beat. That is not the case here as we will see below.
Zacks ESP: Waters Corporation has an Earnings ESP of 0.00%. This is because the Zacks Consensus Estimate of $1.89 per share stands in line with the Most Accurate Estimate.
Zacks Rank: Waters Corporation’s Zacks Rank #3 (Hold), when combined with a zero ESP, makes surprise predictions difficult. We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing a negative estimate revision momentum.
Stocks to Consider
Here are some 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:
Hologic Inc. (HOLX), with an Earnings ESP of +2.78% and a Zacks Rank #1 (Strong Buy).
Intersect ENT, Inc. (XENT), with an Earnings ESP of +11.11% and a Zacks Rank #2 (Buy).
GenMark Diagnostics, Inc. (GNMK), with an Earnings ESP of +10.71% and a Zacks Rank #3.
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