Will Agilent (A) Disappoint This Earnings Season? - Analyst Blog

By Zacks Equity Research,

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Agilent Technologies ( A ) is set to report first-quarter fiscal 2014 results on Feb 13. Last quarter, it posted 6.6% positive surprise. Let's see how things are shaping up for this announcement.

Growth Factors This Past Quarter

Agilent's fiscal fourth-quarter earnings per share of 81 cents beat the Zacks Consensus Estimate by 5 cents driven by good expense control and stronger mix. However, revenues of $1.72 billion missed the Zacks consensus mark by 13.0%. Unfavorable currency changes accounted for a 1.5% decline in revenues although the impact of acquisitions was immaterial.

The Diagnostics segment was a positive for overall gross margin, since the new segment generates significantly higher gross margins than the legacy Agilent business. Also, the company's efficient cost management contributed to margin expansion in the last quarter.

For the first quarter, Agilent expects revenues in the range of $1.68 to $1.70 billion, with core revenues (excluding currency and M&A) expected to grow 2%. The expected earnings are expected in the range of 65 cents-67 cents a share.

Earnings Whispers?

Our proven model does not conclusively show that Agilent will beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here as you will see below.

Zacks ESP:   Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 66 cents. Hence, the difference is 0.00%.

Zacks Rank: Agilenthas a Zacks Rank #3 (Hold) which, when combined with a 0.00% ESP, makes surprise prediction difficult.

We caution against stocks with a 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 companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat:

Melco Crown Entertainment Ltd. ( MPEL ), with Earnings ESP of +7.50% and a Zacks Rank #1 (Strong Buy).

Ship Finance International Ltd. ( SFL ), with Earnings ESP of +52.63% and a Zacks Rank #1.

Salix Pharmaceuticals Ltd. ( SLXP ), with Earnings ESP of +18.75% and a Zacks Rank #1.

AGILENT TECH (A): Free Stock Analysis Report

MELCO CROWN ENT (MPEL): Free Stock Analysis Report

SHIP FIN INTL (SFL): Free Stock Analysis Report

SALIX PHARM-LTD (SLXP): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Earnings , Stocks
Referenced Stocks: A , MPEL , SFL , SLXP

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