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FLIR Systems (FLIR) Q4 Earnings: Another Miss in Store?
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FLIR Systems Inc. is slated to report fourth-quarter 2016 results, before the opening bell on Feb 14.
Last quarter, the company had posted a negative surprise of 2.3%. Also, the company has missed estimates in each of the last four quarters, resulting in an average negative surprise of 3.4%.
Let's see how things are shaping up for this announcement.
Factors to Consider
FLIR Systems’ fourth-quarter results are likely to benefit from the company’s diversified portfolio and diligent restructuring actions. Over the past three years, the company systematically streamlined its businesses by its shutting non-profitable units. These actions have had a positive impact on its key metrics like revenue, operating income, operating margin, adjusted net income and adjusted EPS. We believe that such restructuring initiatives will likely improve the company’s operating efficiency and cost structure. This, in turn, will prove conducive to margin growth for the soon-to-be reported quarter.
In addition, increased adoption of thermal imaging in a broad spectrum of applications, ranging from military to personal hand-held cameras and Smartphones, have been fuelling the growth of FLIR Systems’ imaging & threat-detection technologies. Especially, products based on Infrared Guided Measurement and Lepton thermal camera core technologies have been witnessing impressive market traction, driving top-line growth.
Furthermore, FLIR Systems has consistently pursued acquisitions to boost its core and non-core businesses. In the fourth quarter, we expect the company’s commercial product revenues to benefit significantly from the newly acquired products of DVTEL and Armasight.
Also, during the quarter under review, FLIR Systems inked an agreement to buy Point Grey Research, Inc. for about $253 million. Point Grey develops machine vision cameras used in industrial automation systems, medical diagnostic equipment, intelligent traffic systems, people counting systems, military and defense products, and advanced mapping systems. The addition of Point Grey’s capabilities will add to FLIR Systems’ OEM cores and components business, and expand its range of visible spectrum machine vision cameras and solutions. This can translate into bright prospects and we expect this acquisition to boost the company’s top line for the quarter.
FLIR Systems also acquired the nano helicopter technology firm – Prox Dynamics AS – which will be integrated in its unmanned aerial systems business within the Surveillance segment. It will leverage on the Lepton technology to expand the airborne sensor product line.
Despite these positives, volatile macroeconomic environment has been playing a major spoilsport for the company. Precipitous decline in client spending and capital investments over the past few quarters are likely to hurt the company’s financials for the quarter to be reported. Additionally, the company’s gross profit is vulnerable to a host of factors, including product mix changes, manufacturing cost absorption, adjustments in inventory and rise in competitive pressure in security retail channels. During the last reported quarter, the company booked a $2-million charge for its SkyWatch surveillance towers, which hurt profits.The unit is also struggling with stiff competition in its retail channels and that will most likely hurt its growth prospects.
Quarter to date, FLIR Systems’ shares have recorded a negative average return of 1.3%, in contrast to the Zacks categorized Electronics-Military Systems industry’s average positive return of 2.3%.
Furthermore, multiple factors, including product mix changes, manufacturing cost absorption, adjustments in inventory and rise in competitive pressure in security retail channels, have been putting profits under pressure. Also, unfavorable product mix may prove to be a drag on the operating margin. Moreover, as a major portion of FLIR Systems’ sales originates outside the U.S., the company remains vulnerable to currency fluctuations. Additionally, strong competition, volatility of primary markets and vagaries of the spending by key clients are likely to compound the company’s problems for the to-be-reported quarter.
FLIR Systems, Inc. Price, Consensus and EPS Surprise
Our proven model does not conclusively show that FLIR Systems will beat earnings estimates in this quarter. This 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. This is not the case here as you will see below:
Zacks ESP: Earnings ESP for the company is currently pegged at 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 55 cents.You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: FLIR Systems has a Zacks Rank #3. As it is, we caution against Sell-rated stocks (Zacks Rank #4 or #5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks That Warrant a Look
Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Costco Wholesale Corp. (COST - Free Report) , expected to report earnings on Mar 2, currently has an Earnings ESP of +0.74% and a Zacks Rank #3.
Dollar Tree Inc. (DLTR - Free Report) , expected to release earnings around Mar 7, has an Earnings ESP of +0.75% and a Zacks Rank #2.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>
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FLIR Systems (FLIR) Q4 Earnings: Another Miss in Store?
FLIR Systems Inc. is slated to report fourth-quarter 2016 results, before the opening bell on Feb 14.
Last quarter, the company had posted a negative surprise of 2.3%. Also, the company has missed estimates in each of the last four quarters, resulting in an average negative surprise of 3.4%.
Let's see how things are shaping up for this announcement.
Factors to Consider
FLIR Systems’ fourth-quarter results are likely to benefit from the company’s diversified portfolio and diligent restructuring actions. Over the past three years, the company systematically streamlined its businesses by its shutting non-profitable units. These actions have had a positive impact on its key metrics like revenue, operating income, operating margin, adjusted net income and adjusted EPS. We believe that such restructuring initiatives will likely improve the company’s operating efficiency and cost structure. This, in turn, will prove conducive to margin growth for the soon-to-be reported quarter.
In addition, increased adoption of thermal imaging in a broad spectrum of applications, ranging from military to personal hand-held cameras and Smartphones, have been fuelling the growth of FLIR Systems’ imaging & threat-detection technologies. Especially, products based on Infrared Guided Measurement and Lepton thermal camera core technologies have been witnessing impressive market traction, driving top-line growth.
Furthermore, FLIR Systems has consistently pursued acquisitions to boost its core and non-core businesses. In the fourth quarter, we expect the company’s commercial product revenues to benefit significantly from the newly acquired products of DVTEL and Armasight.
Also, during the quarter under review, FLIR Systems inked an agreement to buy Point Grey Research, Inc. for about $253 million. Point Grey develops machine vision cameras used in industrial automation systems, medical diagnostic equipment, intelligent traffic systems, people counting systems, military and defense products, and advanced mapping systems. The addition of Point Grey’s capabilities will add to FLIR Systems’ OEM cores and components business, and expand its range of visible spectrum machine vision cameras and solutions. This can translate into bright prospects and we expect this acquisition to boost the company’s top line for the quarter.
FLIR Systems also acquired the nano helicopter technology firm – Prox Dynamics AS – which will be integrated in its unmanned aerial systems business within the Surveillance segment. It will leverage on the Lepton technology to expand the airborne sensor product line.
Despite these positives, volatile macroeconomic environment has been playing a major spoilsport for the company. Precipitous decline in client spending and capital investments over the past few quarters are likely to hurt the company’s financials for the quarter to be reported. Additionally, the company’s gross profit is vulnerable to a host of factors, including product mix changes, manufacturing cost absorption, adjustments in inventory and rise in competitive pressure in security retail channels. During the last reported quarter, the company booked a $2-million charge for its SkyWatch surveillance towers, which hurt profits.The unit is also struggling with stiff competition in its retail channels and that will most likely hurt its growth prospects.
Quarter to date, FLIR Systems’ shares have recorded a negative average return of 1.3%, in contrast to the Zacks categorized Electronics-Military Systems industry’s average positive return of 2.3%.
Furthermore, multiple factors, including product mix changes, manufacturing cost absorption, adjustments in inventory and rise in competitive pressure in security retail channels, have been putting profits under pressure. Also, unfavorable product mix may prove to be a drag on the operating margin. Moreover, as a major portion of FLIR Systems’ sales originates outside the U.S., the company remains vulnerable to currency fluctuations. Additionally, strong competition, volatility of primary markets and vagaries of the spending by key clients are likely to compound the company’s problems for the to-be-reported quarter.
FLIR Systems, Inc. Price, Consensus and EPS Surprise
FLIR Systems, Inc. Price, Consensus and EPS Surprise | FLIR Systems, Inc. Quote
Earnings Whispers
Our proven model does not conclusively show that FLIR Systems will beat earnings estimates in this quarter. This 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. This is not the case here as you will see below:
Zacks ESP: Earnings ESP for the company is currently pegged at 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 55 cents.You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: FLIR Systems has a Zacks Rank #3. As it is, we caution against Sell-rated stocks (Zacks Rank #4 or #5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks That Warrant a Look
Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Papa John's International, Inc. (PZZA - Free Report) , expected to release earnings around Feb 21, currently has an Earnings ESP of +4.55% and holds a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Costco Wholesale Corp. (COST - Free Report) , expected to report earnings on Mar 2, currently has an Earnings ESP of +0.74% and a Zacks Rank #3.
Dollar Tree Inc. (DLTR - Free Report) , expected to release earnings around Mar 7, has an Earnings ESP of +0.75% and a Zacks Rank #2.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>