Harman International Industries, Inc.
) to beat expectations when it reports third quarter fiscal 2014
results on May 1. In the second quarter, the company posted a
positive earnings surprise of 11.2%. Moreover, the company has
posted an average positive earnings surprise of 13.6% over the
past four quarters.
Let's see how things are shaping up for this announcement.
Why a Likely Positive Surprise?
Our proven model shows that Harman is likely to beat earnings
because it has the right combination of two key ingredients.
Positive Zacks ESP:
Earnings Surprise Prediction or
, which represents the difference between the Most Accurate
estimate and the Zacks Consensus Estimate, is at +2.00%. This is
very meaningful and a leading indicator of a likely positive
earnings surprise for shares.
Zacks Rank #3 (Hold):
Note that stocks with Zacks Ranks of #1, #2 and #3 have a
significantly higher chance of beating earnings. The sell rated
stocks (#4 and #5) should never be considered going into an
The combination of Harman's Zacks Rank #3 and +2.00% ESP makes us
very confident in looking for a positive earnings beat on May 1.
What is Driving the Better-Than-Expected
Harman's new manufacturing capacities, growing product pipeline,
solid patent portfolio, new awards as well as product launches
will boost the top line and profitability going forward.
Harman continues to win new business awards. In the second
quarter, the company's Infotainment division won customer awards
worth $725.0 million from the likes of VW Group, Chang'an, Geely,
Yamaha, Suzuki, BMW, and Jaguar/Land Rover.
The company launched car audio systems in several vehicles,
including a Lexicon system in the Hyundai Genesis and a JBL
system in the
) Highlander. Moreover, the recently announced partnerships with
), Trikomsel and Brightstar will expand Harman's market share,
Furthermore, Harman continues to expand through its partnerships
with the likes of
). We believe that the new restructuring program will
significantly improve profitability in the near term. This will
provide Harman a competitive edge over the likes of
) going forward.
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