), one of the leading companies in the public safety and
professional communication market, is set to release its
first-quarter of fiscal 2014 results before the opening bell on
Oct 29, 2013.
In the last quarter, the company delivered a 23.68% earnings
surprise. Let's see how things are shaping up for this
Factors to be Considered This Quarter
Recently, Harris won a $960-million major deal from the U.S. Air
force Network-Centric Solutions-2 (NETCENTS-2) Application
Services. Per the deal, Harris will supply indefinite amount of
IT related products and services for three years. Additionally,
Harris has won several orders for its tactical radio products
from the international markets, which will not only strengthen
its order book, but will also compensate the weakness in the
Moreover, the company is on the verge of signing deals with four
major airlines on DCIS equipage and has won $150 million contract
for a period of seven years from the Federal Aviation
Administration's (FAA) NextGen Data Communications Program. Such
robust growth prospects have induced the company to provide an
improved financial guidance for fiscal 2013.
Meanwhile, Harris mostly depends on the U.S. Government contracts
for a major part of its revenues. In the future, any additional
Federal budgetary pressures may result in deeper-than-expected
cuts in defense spending, which may significantly impact the
company's business prospects.
Furthermore, a shift in the U.S. Government's foreign policy
may result in the termination of some major international
contracts. Additional risks may emanate from large-scale
long-term fixed-priced contracts if costs escalate beyond
We believe that the ongoing defense budget contraction will
continue to affect Harris in the long run. Moreover, demand for
the high-margin Integrated Network Solution products is weaker
than expected primarily due to a delay in the healthcare software
Our proven model does not conclusively show that Harris is 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, this is not the case here as elaborated
Negative Zacks ESP:
This is because the Most Accurate Estimate is $1.12 while the
Zacks Consensus Estimate is higher at $1.13. This leads to an ESP
of -0.89% for Harris.
Zacks Rank #2 (Buy):
Harris's Zacks Rank #2, decreases the predictive power of ESP.
We caution investors against the stock going into the earnings
announcement, as a Zacks Earnings ESP of -0.89% combined with a
Zacks Rank # 2 lowers the possibility of an earnings surprise.
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.
) has Earnings ESP of +28.57% and carries a Zacks Rank #1 (Strong
HARRIS CORP (HRS): Free Stock Analysis Report
MOTOROLA SOLUTN (MSI): Free Stock Analysis
SHORETEL INC (SHOR): Free Stock Analysis
TIME WARNER CAB (TWC): Free Stock Analysis
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Motorola Solutions Inc.
) has Earnings ESP of +2.04% and carries a Zacks Rank #2 (Buy).
Time Warner Cable
) has Earnings ESP of +1.22% and carries a Zacks Rank #3