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Can Cerner (CERN) Spring a Surprise this Earnings Season?
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Cerner Corporation is expected to report third-quarter 2016 results on Nov 1. Last quarter, the company reported earnings of 53 cents per share, in line with the Zacks Consensus Estimate.
Notably, the company’s results compared favorably with the Zacks Consensus Estimate in the last four quarters, with an average beat of 1.87%.
Let's see how things are shaping up for this quarter.
Factors at Play
We believe that Cerner’s strong product portfolio will help it to boost its customer base. The frequent contract wins reflect growing traction. Moreover, the company has strong growth opportunities in the revenue cycle management (RCM) and ambulatory market.
For third-quarter 2016, Cerner forecasts revenues between $1.20 billion and $1.275 billion. The mid-point of the guided range reflects 10% year-over-year growth.
Cerner also projects new business bookings between $1.45 billion and $1.60 billion. At mid-point, this reflects a slight decline on a year-over-year basis.
Adjusted earnings (before share-based compensation expense and acquisition-related adjustments) are now expected in the range of 59 cents to 61 cents. At mid-point, this reflects 11% growth on a year-over-year basis.
However, the HCIT market is highly competitive which exerts considerable pressure on both pricing and margins. Moreover, a growing proportion of low-margin services and technology resale may affect margins. Further, stringent hospital budgets continue to exert pressure on pricing, which is an added concern.
Our proven model does not conclusively show that Cerner 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) for this to happen. That is not the case here as you will see below.
Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 53 cents. Hence, Cerner has an Earnings ESP of 0.00%. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
Zacks Rank: Cerner has a Zacks Rank #3 which increases the predictive power of ESP. However, a 0.00% ESP makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are a few stocks worth considering that, per our model, have the right combination of elements to post an earnings beat this quarter:
Glaukos Corporation (GKOS - Free Report) has an earnings ESP of +200% and a Zacks Rank #1.
Invuity, Inc. has an earnings ESP of +1.61% and a Zacks Rank #2.
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Can Cerner (CERN) Spring a Surprise this Earnings Season?
Cerner Corporation is expected to report third-quarter 2016 results on Nov 1. Last quarter, the company reported earnings of 53 cents per share, in line with the Zacks Consensus Estimate.
Notably, the company’s results compared favorably with the Zacks Consensus Estimate in the last four quarters, with an average beat of 1.87%.
Let's see how things are shaping up for this quarter.
Factors at Play
We believe that Cerner’s strong product portfolio will help it to boost its customer base. The frequent contract wins reflect growing traction. Moreover, the company has strong growth opportunities in the revenue cycle management (RCM) and ambulatory market.
For third-quarter 2016, Cerner forecasts revenues between $1.20 billion and $1.275 billion. The mid-point of the guided range reflects 10% year-over-year growth.
Cerner also projects new business bookings between $1.45 billion and $1.60 billion. At mid-point, this reflects a slight decline on a year-over-year basis.
Adjusted earnings (before share-based compensation expense and acquisition-related adjustments) are now expected in the range of 59 cents to 61 cents. At mid-point, this reflects 11% growth on a year-over-year basis.
However, the HCIT market is highly competitive which exerts considerable pressure on both pricing and margins. Moreover, a growing proportion of low-margin services and technology resale may affect margins. Further, stringent hospital budgets continue to exert pressure on pricing, which is an added concern.
CERNER CORP Price and EPS Surprise
CERNER CORP Price and EPS Surprise | CERNER CORP Quote
Earnings Whispers
Our proven model does not conclusively show that Cerner 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) for this to happen. That is not the case here as you will see below.
Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 53 cents. Hence, Cerner has an Earnings ESP of 0.00%. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
Zacks Rank: Cerner has a Zacks Rank #3 which increases the predictive power of ESP. However, a 0.00% ESP makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are a few stocks worth considering that, per our model, have the right combination of elements to post an earnings beat this quarter:
Glaukos Corporation (GKOS - Free Report) has an earnings ESP of +200% and a Zacks Rank #1.
Penumbra, Inc. (PEN - Free Report) has an earnings ESP of +45.46% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Invuity, Inc. has an earnings ESP of +1.61% and a Zacks Rank #2.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>