Headquartered in Waltham, MA, PerkinElmer, Inc.PKI provides scientific instruments, consumables, and services to pharmaceutical, biomedical, environmental testing, chemical, and general industrial markets worldwide. The company is expected to release its first-quarter fiscal 2017 results on May 4, after closing bell.
Interestingly, PerkinElmer's track record has been quite impressive, with the company comfortably beating estimates in three of the trailing four quarters, at an average of 2.7%.
PerkinElmer, Inc. Price and EPS Surprise
Price Performance & Estimate Revision
PerkinElmer has had an impressive run on the bourse over the last three months. The company gained roughly 14.9%, higher than the Zacks categorized Medical Instruments sub-industry's addition of almost 8.8%.
Moreover, the current level compares favorably with the S&P 500's return of 4.8% over the same time frame. This, together with a long-term expected earnings growth rate of 11.9%, instills confidence in investors.
Coming to estimate revisions, the Zacks Consensus Estimate for current quarter earnings has been stable at 54 cents per share over the last two months.
Let's see how things are shaping up prior to this announcement.
Why a Likely Positive Surprise?
Our proven model shows that PerkinElmer is likely to beat earnings because it has the right combination of two key ingredients.
Zacks ESP: PerkinElmer's Earnings ESP stands at +1.85%. This is because the company's Most Accurate estimate is 55 cents while the Zacks Consensus Estimate is pegged at 54 cents. A favorable ESP serves as a meaningful and leading indicator of a likely positive surprise. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .
Zacks Rank: PerkinElmer currently has a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating earnings estimates. Conversely, Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.
The combination of PerkinElmer's Zacks Rank #3 and +1.85% ESP makes us reasonably confident of a beat this earnings season.
Factors at Play
PerkinElmer's expanding product portfolio is helping it gain market traction worldwide. Within a short span of time, its latest products like QSight triple quad, the Operetta CLS High-Content Imaging System, Avio 200 ICP-OES and ChemDraw have gained popularity among consumers. In addition, the company plans to expand its portfolio in the newborn screening space.
Meanwhile, the sale of PerkinElmers' Medical Imaging business will boost its top line. This should bring down volatility in revenues and help the company focus on its core Diagnostics and Discovery & Analytical Solutions opportunities. PerkinElmer continues to acquire a large number of companies. While this improves revenue opportunities, it adds to integration risks.
Furthermore, we are upbeat about the company's target to achieve a 22% adjusted operating margin by 2020, as it is expected to have positive effects on the first quarter of fiscal 2017 results as well.
On the flipside, we are concerned about analytical equipment sales in industrial and environment end markets that remained sluggish last quarter. Furthermore, the industrial end markets in Europe are expected to be competitive.
Other Stocks to Consider
Here are some other companies that you may want to consider as our model shows that they also have the right combination of elements to post an earnings beat this quarter:
Best Buy Co. Inc. BBY has an Earnings ESP of +12.50% and a Zacks Rank #2. Additionally, on an average, the stock represented a positive surprise of almost 27.70% in the last four quarters.
Global Partners LP GLP has an Earnings ESP of +233.33% and a Zacks Rank #1. The stock represented a positive surprise of almost 96.55% in the trailing four quarters. You can see the complete list of today's Zacks #1 Rank stocks here .
Raymond James Financial, Inc. RJF has an Earnings ESP of +3.45% and a Zacks Rank #1. The stock represented a positive surprise of almost 14.4% in the last four quarters.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.