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Will Agilent (A) Miss Earnings Estimates?

A BBY HTH TDG

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Agilent Technologies Inc (A - Analyst Report) is set to report fourth quarter 2013 results on Nov 14. Last quarter it posted a 9.7% positive surprise. Let’s see how things are shaping up for this announcement.

Growth Factors this Past Quarter

Agilent’s earnings per share of 68 cents in the last quarter beat the Zacks Consensus Estimate by 6 cents, driven by lower operating expenses and aggressive share repurchases in the past quarter. The sequential contraction in gross margin was related to volume declines in the Electronics Measurement segment and unfavorable mix in the Diagnostics and Genomics segment. Agilent’s increasing exposure to Asia and its limited presence in Europe also helped earnings per share.

For the fourth fiscal quarter, Agilent expects revenues to be in the range of $1.7 billion to $1.72 billion. Non-GAAP earnings per share are expected to be in the range of 75 cents to 77 cents.

Earnings Whispers?

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

Negative Zacks ESP: That is because the Most Accurate estimate stands at 75 cents while the Zacks Consensus Estimate is higher at 76 cents. Hence the difference is -1.3%.

Zacks Rank #2 (Buy): Agilent’s Zacks Rank #2 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:  

Best Buy (BBY - Analyst Report), Earnings ESP of +18.2% and a Zacks Rank # 1 (Strong Buy)

Transdigm Group (TDG - Analyst Report), Earnings ESP of +50.0% and a Zacks Rank # 2 (Buy)

Hilltop Holdings Inc (HTH - Analyst Report), Earnings ESP of +3.2% and a Zacks Rank # 2 (Buy)
 

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