), a leading stored energy solutions provider, is set to report
first-quarter fiscal 2015 results on Aug 7. Last quarter, it posted
a 7.3% positive surprise. Moreover, the company has delivered
positive earnings surprises in all the trailing four quarters with
an average beat of 4.6%. Let's see how things are shaping up for
Factors Influencing this Quarter
EnerSys has been going strong for the past couple of years
driven by a diligent operational execution and robust financial
position. The company has been driving organic growth by increasing
investments in innovative technologies to further strengthen its
position in the manufacturing industry. The strong activity in
telecom and motive power businesses, especially in key regions like
the Americas and Asia is a positive. Moreover, the ongoing
recovery in the European telecom sector is leading to increased
demand for 4G networks. The company being a provider of batteries
for 4G is likely to gain significantly from this positive
development. EnerSys expects over 10% growth in this market over
the next couple of years.
This apart, it is focused on pursuing strategic acquisitions to
expand its business. In fiscal 2014, the company closed three
critical acquisitions, which are expected to contribute about $200
million to revenues in fiscal 2015.
However, the ongoing restructuring process coupled with
increased pricing pressures might prove to be a headwind for the
company. This apart, the company's thermal management business from
its Purcell acquisition has been witnessing sluggish growth.
Further, EnerSys is making significant investments to set up and
revamp manufacturing plants in developing markets like Asia,
especially in India and China. The cost of these is likely to be a
drag on the company's financials in the short run. The $58.2
million charges for the Altergy arbitration is also expected to
weigh on the company's results in the quarter.
Our proven model does not conclusively show that EnerSys is
likely to beat earnings this quarter. This is because a stock needs
to have both a positive
and a Zacks Rank of #1, 2 or 3 for this to happen. This is not the
case here as you will see below.
The Earning ESP stands at0.00%. This is because both the Most
Accurate estimate and the Zacks Consensus Estimate stand at
EnerSys has a Zacks Rank #3 (Hold). Though a favorable Zacks
Rank increases the predictive power of ESP, the company's ESP of
0.00% makes surprise prediction difficult. We caution against
stocks with Zacks #4 and 5 Ranks (Sell-rated stocks) going into the
earnings announcement, especially when the company is witnessing
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:
The Andersons, Inc. (
) with an Earnings ESP of +6.09% and Zacks Rank #1 (Strong
Infosys Ltd. (
), with Earnings ESP of +1.24% and a Zacks Rank #2(Buy).
ACE Limited (
), with Earnings ESP of + 0.45% and a Zacks Rank #2.
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