Security and protection services provider Tyco International Ltd. TYC is scheduled to report its second-quarter fiscal 2015 results before the market opens on Apr 24. In the last reported quarter, Tyco’s adjusted earnings exactly matched with the Zacks Consensus Estimate. Let’s see how things are shaping up for this announcement.
Key Factors in the Second Quarter
During the soon-to-be-reported quarter, Tyco completed the acquisition of Texas-based gas & flame detection products manufacturer Industrial Safety Technologies. The strategic purchase will augment Tyco’s gas & flame detection capabilities across the globe and generate additional revenues.
Industrial Safety Technologies manufactures industrial safety products to protect the sanctity of workplaces and save countless lives by avoiding risks related to fire and poisonous gases. The company manufactures industrial grade fixed gas detectors, control systems, pipeline analyzers, and wireless technology products; trace consumables and checkpoint screening products for explosives and narcotics trace detectors; and portable gas detection instruments and enhancements for oil and gas, chemical, and shipping industries.
With a strong presence across diversified markets in Europe, the Middle East, and the U.S. Gulf Coast region, Industrial Safety Technologies offers Tyco an increased market penetration for cutting-edge industrial safety solutions. The transaction is expected to generate annualized revenues of $140 million for Tyco.
At the same time, Tyco is augmenting its Internet of Things (IoT) capabilities by infusing proven technology and innovations into its existing product portfolio. Tyco has a long-serving IoT business that focuses on the retail market and delivers visibility and predictive capabilities for key insights into inventories, store traffic, and customer behavior. These enable retailers to undertake justifiable steps to maximize revenue by optimizing inventory and deliver a memorable shopping experience.
Tyco's IoT platform collates data from traditional facilities-oriented systems and transfers them into valuable business intelligence system to perform advanced analytics and gain critical insight. Tyco is presently extending this IoT platform to incorporate more sensors, devices and applications to capitalize on the huge market potential of the IoT market.
Earnings Whispers
However, our proven model does not conclusively show that Tyco is likely to beat earnings this quarter as it lacks the key ingredients for a success recipe.
Zacks ESP: Expected Surprise Prediction or Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is currently pegged at 0.00%. This indicates a likely in-line earnings for the shares.
Zacks Rank: Tyco’s Zacks Rank #3 (Hold) when combined with 0.00% ESP reduces the predictive power of ESP. Note that stocks with a Zacks Ranks of #1 (Strong Buy), #2 (Buy) 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, especially when the company is seeing negative estimate revisions momentum.
Other 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:
Waste Management, Inc. WM, earnings ESP of +2.04% and Zacks Rank #2.
Popular, Inc. BPOP, earnings ESP of +9.86% and Zacks Rank #1.
Huntington Ingalls Industries, Inc. HII, earnings ESP of +2.91% and Zacks Rank #2.
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