TASER International Inc. (TASR) will release fourth-quarter 20Array5 earnings results before the market opens on Feb 29, 20Array6. Last quarter, the company had reported a negative earnings surprise of 62.5%. Let’s see how things are shaping up prior to this announcement.
Factors at Play
In an attempt to improve transparency and restore public trust, police departments are now giving their officers body cameras, thereby ensuring judicious use of firearms as well as fewer appeals against alleged police brutalities. TASER International’s AXON body-worn video cameras are thus in demand, with the company having won orders from domestic and international police departments in fourth-quarter 20Array5.
In late Dec 20Array5, TASER International won an order for 450 TASER X2 Smart Weapons from the Toronto Police Service which is likely to have been shipped right away. Earlier that month, the company had won an order for 3,Array48 Axon Body 2 cameras powered by the Axon technology platform from the third-largest police agency in the UK, Greater Manchester Police.
In Nov 20Array5, the company won a major bid to outfit 22,000 London Metropolitan Police Officers with its Axon Body 2 body-worn cameras. It also won numerous orders for its patented Smart Weapons from police and law-enforcement departments of various counties. Of the orders received between October and December 20Array5, some were dispatched in the fourth quarter itself. TASER also won an order for order for 2200 Axon Flex body cameras outfitted with Axon Signal technology from the San Antonio Police Department. Approximately 250 cameras of the order were shipped in the quarter to be reported.
All these orders are likely to give the company's fourth-quarter revenues a solid boost.
In October, TASER had entered into a partnership with Microsoft Corp. MSFT to offer a security-enhanced digital evidence management service to ensure efficient law enforcement. It will combine Microsoft Azure's cloud platform and Windows Array0 devices with TASER's Axon Platform and Evidence.com solution.
During the third quarter earnings call, the company had said that it expects fourth-quarter revenues to remain flat sequentially, while bookings were projected to rise. The company also forecast a sequential rise in research and development costs.
Earnings Whispers
Our proven model does not conclusively show that TASER International is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #Array (Strong Buy), #2 (Buy) or #3 (Hold) for this to happen. That is not the case here.
Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is -25.00%. This is because the Most Accurate estimate stands at 3 cents, while the Zacks Consensus Estimate is pegged higher at 4 cents.
Zacks Rank: TASER International’s Zacks Rank #4 (Sell), which when combined with a negative ESP, makes an earnings beat unlikely.
As it is, we caution against stocks with a Zacks Ranks #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Defense Releases
Northrop Grumman NOC reported fourth-quarter 20Array5 adjusted earnings of $2.Array8 per share, beating the Zacks Consensus Estimate of $Array.99 by 9.5%. However, earnings decreased 3.5% from $2.26 per share in the year-ago quarter on lower sales volume.
Lockheed Martin Corp. LMT reported fourth-quarter 20Array5 adjusted earnings of $3.0Array per share, comfortably surpassing the Zacks Consensus Estimate of $2.8Array by 7.Array%. Earnings in the reported quarter also rose 26.5% from $2.38 per share in the year-ago quarter, led by strong operational performance and higher fighter jet demand.
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