) is set to report its first-quarter fiscal 2013 results, before
the market opens, on Friday, Jan 25. Let's see how things are
shaping up prior to the announcement.
In the last quarter, the international health care product
major posted a 2.00% positive earnings surprise, reflecting
better-than-expected sales and improved expense control.
Factors to Consider this Past Quarter
Covidien continues to expand both organically as well as
inorganically, despite a challenging Med-tech environment.
Further, the company remains committed to delivering incremental
returns to its investors through dividend hikes and share
We see opportunities for multiple expansions, based on the
strength and diversity of the company's business and its ability
to grow on the back of strategic investments and portfolio
reshaping initiatives toward high-growth/high-margin businesses.
Additionally, the exit of a competitor in the nursing care
business has presented opportunities for the company to gain
market share in the U.S.
However, we remain concerned regarding product recall-related
issues, which might affect its top-line growth. Tough competition
as well as acquisition and divestment risks continue to be major
headwinds for the company.
Our proven model does not conclusively show that Covidien is
likely to beat earnings estimates this quarter. This is because a
stock needs to have both a positive Earnings ESP (Expected
Surprise Prediction) (Read:
Zacks Earnings ESP: A Better Method
) as well as a Zacks Rank of #1, 2 or 3 for this to happen. This
is not the case here as you will see below.
Zacks Earnings ESP
: The Most Accurate estimate stands at $1.06, while the
Zacks Consensus Estimate is also pegged at $1.06. This comes to a
difference of 0.00%.
Zacks Rank #3 (Hold):
Covidien's Zacks Rank #3 (Hold) lowers the predictive power of
ESP. The Zacks Rank #3 together with 0.00% earnings ESP makes
surprise prediction difficult.
Other Stocks to Consider
Here are some other companies you may want to consider as our
model shows that these have the right ingredients to post an
earnings beat this quarter:
), Earnings ESP of +72.73% and Zacks Rank #2 (Buy)
),Earnings ESP of +26.67% and Zacks Rank #2 (Buy)
Hill-Rom Holdings, Inc.
), Earnings ESP of +2.27% and Zacks Rank #2 (Buy)
COVIDIEN PLC (COV): Free Stock Analysis
HILL-ROM HLDGS (HRC): Free Stock Analysis
NUVASIVE INC (NUVA): Free Stock Analysis
QUIDEL CORP (QDEL): Free Stock Analysis
To read this article on Zacks.com click here.