) is set to report its second-quarter fiscal 2014 results on
April 25, 2014. In the last reported quarter, the company had
posted a positive earnings surprise of 6.38%. In fact, Covidien
delivered positive surprises in all of its last 4 quarters, with
an average beat of 2.61%. Let's see how things are shaping up for
Factors at Play in the Past Quarter
Despite unfavorable foreign exchange rate, the medical device
tax and incremental investments in emerging markets, Covidien's
first-quarter earnings rose 3.1% year over year to $1.00 per
share and beat the Zacks Consensus Estimate by 6 cents.
In the last reported quarter, Covidien's adjusted operating
earnings declined 0.8% year over year to $599 million, while
reported operating earnings dropped 10.9% to $531 million.
Unfavorable foreign exchange rate and the medical device tax led
to this decline in both the reported and adjusted operating
However, management remains impressed with the 2.8%
year-over-year increase in the company's revenues to $2,639
million, which exceeded the Zacks Consensus Estimate by 1.42%.
The company expects revenues to grow 2-5% year over year at
constant exchange rate for fiscal 2014.
Our proven model does not conclusively show that Covidien is
likely to beat earnings this quarter. That is because a stock
needs to have both a positive
and a Zacks Rank of #1, 2 or 3 for this to happen. That is not
the case here, as you will see below.
: Covidien has a negative Zacks ESP. That is because the
Most Accurate estimate stands at 94 cents while the Zacks
Consensus Estimate is higher at 95 cents. That leads to a
difference of -1.05%.
: Covidien's Zacks Rank #3 (Hold) when combined with a negative
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
negative estimate revisions momentum.
Other Stocks to Consider
Here are some other medical companies you may want to consider
as our model shows they have the right combination of elements to
post an earnings beat this quarter:
Align Technology Inc
), earnings ESP of +13.89% and a Zacks Rank #1 (Strong Buy).
Myriad Genetics Inc.
), earnings ESP of +10.87% and a Zacks Rank #1 (Strong Buy).
Cardinal Health, Inc.
), earnings ESP of +1.00% and Zacks Rank #2 (Buy).
ALIGN TECH INC (ALGN): Free Stock Analysis
CARDINAL HEALTH (CAH): Free Stock Analysis
COVIDIEN PLC (COV): Free Stock Analysis
MYRIAD GENETICS (MYGN): Free Stock Analysis
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