Varian Medical Systems, Inc. (VAR) is slated to report its fiscal 2014-third-quarter earnings on Jul 23, after the closing bell. In the previous quarter, Varian Medical recorded a positive earnings surprise of 1.96%. Let’s see how things are shaping up for this announcement.
Growth Factors this Past Quarter
In the last reported quarter, Varian Medical topped estimates on both fronts. Revenue growth was driven by strong gross orders in the Imaging Components segment and proton business as well as mid-single digit growth in the Oncology Systems segment.
Strong service growth, strength in Latin America and Australia as well as strong panel business led gross orders to rise in the Oncology Systems and Imaging Components segments. However, Varian Medical continues to face competition and pricing pressure in its X-ray tube business and volume decline in its security and inspection products.
During the quarter, Varian Medical entered into several new multi-year agreements with large hospital systems, with possibilities of more such deals going forward.
Earnings Whispers?
Our proven model does not conclusively show that Varian Medical 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, 2 or 3 for this to happen. This is not the case here as you will see below:
Earnings ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is currently pegged at 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at $1.08.
Zacks Rank: Varian Medical’s Zacks Rank #3 (Hold) when combined with an ESP of 0.00% makes surprise prediction difficult.
We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Other Stocks to Consider
Here are some other companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
Cepheid (CPHD) with an earnings ESP of 22.22% and a Zacks Rank #3 (Hold).
Hospira Inc. (HSP) with an earnings ESP of 1.79% and a Zacks Rank #2 (Buy).
Wright Medical Group Inc. (WMGI) with an earnings ESP of 2.22% and a Zacks Rank #1 (Strong Buy).
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