Harris Corporation (HRS), a leading supplier of communications equipment and services, is set to report its fourth-quarter fiscal 2014 financial numbers on July 29, 2014, before the opening bell.
Last quarter, the Harris reported a 6.72% positive earnings surprise. Moreover, the company outpaced the Zacks Consensus Estimate in all of the last four quarters. Let’s see how things are shaping up for Harris prior to this announcement.
Factors to Consider This Quarter
Harris expects revenues for fiscal 2014 to drop 2–3% from fiscal 2013, mainly due to weaker-than-expected demand for the company’s tactical radios. Rigid U.S. government spending for defense, coupled with delays in several key international order procurements, which have been postponed to early next year, has led to such a tepid guidance.
For fiscal 2014, Harris raised its forecast for adjusted earnings per share from continuing operations to $4.90–$5.00 from the earlier projected $4.80–$4.90,mainly owing to 3% annual growth in international military spending.
Earnings Whispers?
Our proven model does not conclusively show that Harrisis likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here as elaborated below.
Zero Zacks ESP: This is because both the Most Accurate estimate and the Zacks Consensus Estimate are poised at $1.27. This leads to an ESP of 0.00% for Harris.
Zacks Rank: Harris has a Zacks Rank #3 when combined with a 0.00% ESP makes surprise prediction difficult.
We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing a negative estimate revision momentum.
Other Stocks to Consider
Here are some other companies to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
ViaSat Inc. (VSAT) has an earnings ESP of +375% and carries a Zacks Rank #3.
CenturyLink, Inc. (CTL) has an earnings ESP of +1.56% and carries a Zacks Rank #3.
TIM Participacoes S.A. (TSU) has an earnings ESP of +16.67% and carries a Zacks Rank #1.
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