Harris Corporation (HRS) is scheduled to report first-quarter fiscal 2015 results on Oct 28, before the opening bell.
In the last quarter, Harris had delivered a positive 0.79% earnings surprise – the fourth successive earnings beat – on the back of higher-than-expected revenues. Let’s see how things are shaping up ahead of this announcement.
Factors at Play
We expect results in the quarter to be impacted positively by the cost-cutting measures adopted by Harris Corporation. Moreover, we note the company has recently clinched multiple vital contracts.
Last month, Harris received a massive order worth $88 million from an unidentified country in the Middle East to supply Falcon III wideband tactical radios and accessories. The company will deliver the RF-7800H wideband HF tactical radio, the RF-7850M radio and the RF-7800S lightweight soldier personal radio as part of the deal. Such regular and valuable contract wins should boost Harris’ top and bottom lines higher in the near term.
However, a major chunk of Harris’ revenues depend largely on government contracts. This can prove to be risky given that the U.S. Department of Defense has decided to reduce its budget significantly.
Earnings Whispers?
Our proven model does not conclusively show that Harris 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. Unfortunately, this is not the case here, as elaborated below.
Zacks ESP: Earnings ESP for Harris is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at $1.10 per share.
Zacks Rank: Harris carries a Zacks Rank #4 (Sell).
We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks That Warrant a Look
Here are some companies you may want to consider instead as our model shows these have the right combination of elements to post an earnings beat this quarter.
CenturyLink, Inc. (CTL) has an earnings ESP of +1.61% and carries a Zacks Rank #3 (Hold). The company is scheduled to release third-quarter results on Nov 5.
Ruckus Wireless (RKUS) has an earnings ESP of +60.00% and also carries a Zacks Rank #3. It is scheduled to report third-quarter financial numbers on Nov 3.
Liberty Interactive Corp. (QVCA) has an earnings ESP of +10.00% and carries a Zacks Rank #3. The company is expected to report third-quarter results on Nov 4.
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