TASER International Inc. will release second-quarter 2016 earnings results after the market closes on Aug 4. Last quarter, the company reported a positive earnings surprise of 100.00%. Let’s see how things are shaping up prior to this announcement.

Factors at Play

Demand for TASER International’s products and services saw a steep rise, particularly in the U.S., due to increasing tensions between law enforcement officials and the public. The company’s entry into the wearable camera space should further boost its results.

In an attempt to improve transparency and restore public trust, police departments are now deploying officers with body cameras so as to ensure judicious use of firearms as well as fewer appeals against alleged police brutalities. TASER International’s AXON body-worn video cameras are, thus, in demand, with the company winning orders from both domestic and international police departments. These hot-selling body cameras come with a cloud storage service – EVIDENCE.com.

During the quarter, the company has bagged a number of orders from various police departments. Notable buyers include Montreal police, West Midlands Police and Jacksonville Sheriff's Office.

In June, the company entered into a partnership with Cradlepoint, a global leader in software-defined 4G LTE networking solutions, to integrate the Axon body cameras with Cradlepoint's wireless router platform to offer technologically superior wireless connectivity to law enforcement officers. These strategic moves will aid its future performance.

During its first-quarter earnings call, the company said that it expects to witness stronger growth in recurring revenues during the second quarter. The full-year bookings growth rate is projected to be higher than that of operating expense.

For the second quarter, the Zacks Consensus Estimate for earnings reflects a 69.7% year-over-year decline, while sales are anticipated to improve 14% to $53.3 million.

On the flip side, the company is witnessing volatility in its business due to intensifying competition in the space and cyclical sales of its products. The company’s gun sales often rise in the wake of mass shootings or police shootings of civilians, and then experience a slump as time passes.

Earnings Whispers

Our proven model does not conclusively show that TASER International is likely to beat on earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) to be able to beat estimates. However, that is not the case here as you will see below.

Zacks ESP: TASER International has an Earnings ESP of 0.00%. This is because the Most Accurate estimate of 3 cents stands in line with the Zacks Consensus Estimate.

Zacks Rank: TASER International has a Zacks Rank #4 (Sell). As it is, we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement.

Stocks to Consider

Here is a company in the Aerospace/Defense industry worth considering on the basis of our model, which shows that it has the right combination of elements to post an earnings beat this quarter.

Orbital ATK, Inc. has an Earnings ESP of +3.85% and a Zacks Rank #3. The company is expected to report second-quarter 2016 results on Aug 4.

Some Defense Releases

Northrop Grumman Corporation (NOC Quick QuoteNOC - Free Report) reported second-quarter 2016 adjusted earnings of $2.60 per share, beating the Zacks Consensus Estimate of $2.50 by 4%. Reported earnings were also up 5.3% from $2.47 recorded in the year-ago quarter.

Lockheed Martin Corp. (LMT Quick QuoteLMT - Free Report) reported second-quarter 2016 earnings of $3.32 per share, surpassing the Zacks Consensus Estimate of $2.92 by 13.7%. Earnings were also up 12.9% from the year-ago level.

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