Ametek Inc. AME is set to report second-quarter 2015 results on Aug 4, before market opens. Last quarter, it delivered in line results. Let’s see how things are shaping up for this announcement.
Factors to Consider
AMETEK reported modest first quarter results with the bottom line matching the Zacks Consensus Estimate but the top line missing the same. But both revenues and earnings increased year over year. Strong operating performance primarily led to the year-over-year increase in earnings.
Revenues decreased sequentially. Sustained strength in the U.S. dollar and a sluggish macroeconomic environment proved to be a drag on revenues.
Also, gross margin for the quarter was 35.4%, up 16 basis points (bps) from 35.2% in the preceding quarter but down 53 bps from the year-ago quarter’s 35.9%.
The company believes that strong execution of its four core growth strategies of operational excellence, global market expansion, new product development, and strategic acquisitions will continue to play an important role in driving growth. This in combination with its excellent backlog and strong portfolio of businesses will help the company post better results in the to-be reported quarter.
For the second quarter, management expects revenues to be more or less flat year over year. Earnings per share are expected to be approximately 63 cents to 64 cents. This earnings guidance represents an increase of 3% to 5% on a year-over-year basis. The Zacks Consensus Estimate for revenues for the quarter is pegged at $995 million.
Earnings Whispers?
Our proven model does not conclusively show that Ametek will beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 63 cents. Hence, the difference is 0.00%.
Zacks Rank: Ametek’s Zacks Rank #2 (Buy) when combined with a 0.00% ESP makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Stocks to Consider
Here are some other companies, which you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:
ZAGG Inc ZAGG, with Earnings ESP of +12.50% and a Zacks Rank #2
Sprint Corporation S with an Earnings ESP of +25.00% and a Zacks Rank #3 (Hold)
Interxion Holding NV INXN, with Earnings ESP of +6.67% and a Zacks Rank #3
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