Harris Corporation HRS is slated to release its second-quarter fiscal 2016 results on Feb 2, before the market opens.
Last quarter, Harris had delivered a positive earnings surprise of 2.34%. Moreover, the company’s earnings have surpassed the Zacks Consensus Estimate in all the previous four quarters, with an average beat of 7.89%. Let’s see how things are shaping up for this announcement.
Why a Likely Positive Surprise?
Our proven model shows that the company is likely to beat the Zacks Consensus Estimate because it has the right combination of two key ingredients.
Zacks ESP: Harris has an earnings ESP of +2.21%. This is because the Most Accurate estimate of earnings is $1.39 while the Zacks Consensus Estimate is pegged at $1.36. This is meaningful and a leading indicator of a likely positive earnings surprise.
Zacks Rank: Harris has a Zacks Rank #2 (Buy). Note that stocks with a Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) have a significantly higher chance of beating earnings estimates. Conversely, Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.
The combination of Harris’s Zacks Rank #2 and +2.21% ESP makes us confident of an earnings beat at the company.
What is Driving the Better-than-Expected Earnings?
Harrisrecently landed a significant tactical radio contract worth $390 million from the U.S. Special Operations Forces (SOF). Per the agreement, Harris will deliver two-channel handheld tactical radios to the department.
In addition, Harris also signed a four-year deal valued at $113 million with the U.S. Naval Sea Systems Command (NAVSEA). Initially, the contract had three one-year options and was worth $39 million.
We believe such a strong order backlog coupled with continuous contract wins will boost the company’s top line to a great extent in the fiscal second quarter.
Other Stocks to Consider
Here are some other companies that you may consider as our model shows these too have the right combination of elements to post an earnings beat this quarter:
Extra Space Storage Inc. EXR has an earnings ESP of +1.15% and carries a Zacks Rank #1.
AMN Healthcare Services Inc. AHS has an earnings ESP of +2.44% and carries a Zacks Rank #1.
ARRIS International plc ARRS has an earnings ESP of +4.88% and carries a Zacks Rank #1.
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