Raven Industries Inc.RAVN is set to release its fourth-quarter fiscal 2015 results before the opening bell on Mar 11, 2015. Last quarter, the company delivered a negative surprise of 33.33%. In fact, the company has posted negative surprises in each of the trailing four quarters with an average of 23.86%. Let's see how things are shaping up for this announcement.
Factors to Watch For
Business conditions continue to be tough for Raven. Primarily, the Applied Technology division will be facing persistent and significant headwinds in the North American agriculture market. The company believes that growth in the division will not be sufficient to offset the expected declines in sales and operating income. As a result, Raven doesn't anticipate profit growth in the fourth quarter over the year-ago period.
In addition, Raven missed its long-term goal of 10% sales and operating income growth in fiscal 2014 and remains concerned about meeting its long-term annual earnings growth goal of 10% to 15% in fiscal 2015. Moreover, fluctuation in exchange rate, increased competition and volatile raw-material costs remain matters of concern for the company.
Raven's Aerostar segment sales were affected by planned decline in contract manufacturing in the third quarter of fiscal 2015. The company expects contract manufacturing decline of $25 million again in fiscal 2015. Further, the U.S. government business volume remains challenging due to reduction in defense spending.
However, Raven will likely benefit from its fiscal 2015 objectives, including considerable growth in revenues from situational awareness, bringing high-value plastic film applications and selectively pursuing targeted Applied Technology opportunities through new products and broadening OEM (Original equipment manufacturer) relationships.
Raven's investments in Vista Research R&D, Google Inc.'s GOOG Project Loon and ongoing new product developments will drive growth. Moreover, the company continues to focus on implementation of cost control measures and international market expansion in order to drive growth.
Our proven model does not conclusively show that Raven is likely to beat earnings estimates 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: The Earnings ESP for Raven is 0.00% as the Most Accurate estimate of 21 cents is in line with the Zacks Consensus Estimate.
Zacks Rank #4 (Sell): Raven currently holds a Zacks Rank #4. We caution against stocks with Zacks Rank #4 and #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Other Stocks to Consider
Here are some other companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
Danaher Corp. DHR has an earnings ESP of +3.23% and a Zacks Rank #2 (Buy).
Honeywell International Inc. HON has an earnings ESP of +0.72% and a Zacks Rank #3 (Hold).
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