Foster Wheeler AG
) is set to report its first quarter 2013 results on May 2. Last
quarter, it posted a 17.4% negative surprise. Let's see how
things are shaping up for this announcement.
Growth Factors this Past Quarter
Foster Wheeler reported weak fourth quarter 2012 results
compared to a reasonably strong fourth quarter of 2011. The
company reported a 30.8% decline in adjusted earnings per share
and the backlog also dropped on a year-over-year basis. The
decline was mainly because of missing out on key dates for
committed projects. Further, power generation markets globally
continue to be relatively weak. Unstable environmental
regulations in Europe coupled with low natural gas prices in the
U.S. have delayed or dampened the retrofit markets. In addition,
the markets for renewable power have been depressed in many
regions due to overbuilding during the past decade and current
government reluctance to continue subsidization.
Our proven model does not conclusively show that Foster is
likely to beat earnings this quarter. That is because a stock
needs to have both a positive Earnings ESP (Read:
Zacks Earnings ESP: A Better Method
) and a Zacks Rank of #1, 2 or 3 for this to happen. That is not
the case here as you will see below.
Positive Zacks ESP:
That is because the Most Accurate Estimate stands at $0.15 while
the Zacks Consensus Estimate is lower at $0.17. That is a
difference of -11.8%.
Zacks #5 Rank (Strong Sell).
Foster's Zacks #5 Rank (Strong Sell) lowers the predictive power
of ESP because the Zacks #5 Rank when combined with a negative
ESP 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 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 this quarter:
AECOM Technology Corporation
) with Earnings ESP of 1.92% and a Zacks #2 Rank (Buy)
) with Earnings ESP of 1.33% and a Zacks #2 Rank (Buy)
) with Earnings ESP of 1.79% and a Zacks #3 Rank (Hold)
AECOM TECH CORP (ACM): Free Stock Analysis
CHICAGO BRIDGE (CBI): Free Stock Analysis
FOSTER WHELR AG (FWLT): Free Stock Analysis
KBR INC (KBR): Free Stock Analysis Report
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