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Why an Earnings Beat is Likely for Waters Corp. (WAT) in Q2
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Waters Corporation (WAT - Free Report) is set to report second-quarter 2017 results, before the opening bell on Jul 25.
The company posted a positive earnings surprise of 9.8% in the last reported quarter. Overall, Waters Corp. has an average positive surprise of 5.8% for the trailing four quarters, having beaten estimates thrice.
Let’s see how things are shaping up for this announcement.
Why a Likely Positive Surprise?
According to our proven model, Waters Corp. has the right combination of two key ingredients — positive Earnings ESP and a Zacks Rank #3 (Hold) or better — to increase the odds of an earnings beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks ESP: Waters Corp. has an Earnings ESP of +0.58%. This is because the Most Accurate estimate of $1.73 comes above the Zacks Consensus Estimate of $1.72. This is a major indicator of a likely positive earnings surprise.
Zacks Rank: Waters Corp.’s Zacks Rank #2 (Buy), when combined with a positive ESP, makes us reasonably confident of an earnings beat.
Factors to Drive Better-than-Expected Results
Waters Corp.’s key strengths include a dominant position in the biopharma end markets and thriving sales in emerging markets. Global pharmaceuticals business, in particular, is the company’s largest single market and has been a major profit churner for the Waters Division over the past few quarters. We believe the company’s second-quarter financials will benefit from steady demand from pharmaceutical business, growth in recurring revenue and modest recovery of industrial markets.
Moreover, the company’s Industrial business, which has gained momentum in the past few quarters due to increasing demand for improved food quality and safety testing, is also likely to drive the quarter’s top line. In addition, demand for research intensive products, especially the company’s mass spectrometry solutions and liquid chromatography, has been on an uptrend lately and is likely to drive second-quarter sales.
During the last reported quarter, Waters Corp.’s liquid chromatography benefited from the ACQUITY Arc System while mass spectrometry sales grew on the back of QDa and Xevo family of Tandem Quadrupole. We believe robust market traction of the ACQUITY, CORTECS and Xevo line of products will supplement the top-line performance of the soon-to-be-reported quarter. In light of the above catalysts, the company’s shares have appreciated 37% year to date, outperforming the industry’s average gain of 35.5%.
Despite these positives, sluggishness in the company’s academic and government businesses are likely to restrict growth to some extent. Of late, unfavorable order timing and volatility associated with instrument-heavy business have played a spoilsport for the academic and government businesses. Also, weakness in the chemical industry on a global scale is likely to dampen sales performance for the to-be-reported quarter. Further, we believe that currency fluctuations will remain a risk to the company’s top line in the quarter under review as well.
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:
Belden Inc. (BDC - Free Report) , with an Earnings ESP of +0.83% and a Zacks Rank #1, is slated to report results on Aug 2.
DENTSPLY SIRONA Inc. (XRAY - Free Report) , with an Earnings ESP of +4.55% and a Zacks Rank #3, is expected to report quarterly numbers on Aug 4.
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Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
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Image: Bigstock
Why an Earnings Beat is Likely for Waters Corp. (WAT) in Q2
Waters Corporation (WAT - Free Report) is set to report second-quarter 2017 results, before the opening bell on Jul 25.
The company posted a positive earnings surprise of 9.8% in the last reported quarter. Overall, Waters Corp. has an average positive surprise of 5.8% for the trailing four quarters, having beaten estimates thrice.
Let’s see how things are shaping up for this announcement.
Why a Likely Positive Surprise?
According to our proven model, Waters Corp. has the right combination of two key ingredients — positive Earnings ESP and a Zacks Rank #3 (Hold) or better — to increase the odds of an earnings beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks ESP: Waters Corp. has an Earnings ESP of +0.58%. This is because the Most Accurate estimate of $1.73 comes above the Zacks Consensus Estimate of $1.72. This is a major indicator of a likely positive earnings surprise.
Zacks Rank: Waters Corp.’s Zacks Rank #2 (Buy), when combined with a positive ESP, makes us reasonably confident of an earnings beat.
Factors to Drive Better-than-Expected Results
Waters Corp.’s key strengths include a dominant position in the biopharma end markets and thriving sales in emerging markets. Global pharmaceuticals business, in particular, is the company’s largest single market and has been a major profit churner for the Waters Division over the past few quarters. We believe the company’s second-quarter financials will benefit from steady demand from pharmaceutical business, growth in recurring revenue and modest recovery of industrial markets.
Moreover, the company’s Industrial business, which has gained momentum in the past few quarters due to increasing demand for improved food quality and safety testing, is also likely to drive the quarter’s top line. In addition, demand for research intensive products, especially the company’s mass spectrometry solutions and liquid chromatography, has been on an uptrend lately and is likely to drive second-quarter sales.
During the last reported quarter, Waters Corp.’s liquid chromatography benefited from the ACQUITY Arc System while mass spectrometry sales grew on the back of QDa and Xevo family of Tandem Quadrupole. We believe robust market traction of the ACQUITY, CORTECS and Xevo line of products will supplement the top-line performance of the soon-to-be-reported quarter. In light of the above catalysts, the company’s shares have appreciated 37% year to date, outperforming the industry’s average gain of 35.5%.
Despite these positives, sluggishness in the company’s academic and government businesses are likely to restrict growth to some extent. Of late, unfavorable order timing and volatility associated with instrument-heavy business have played a spoilsport for the academic and government businesses. Also, weakness in the chemical industry on a global scale is likely to dampen sales performance for the to-be-reported quarter. Further, we believe that currency fluctuations will remain a risk to the company’s top line in the quarter under review as well.
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:
Newell Brands Inc. (NWL - Free Report) , with an Earnings ESP of +1.18% and a Zacks Rank #2, is expected to release quarterly numbers around Aug 4. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Belden Inc. (BDC - Free Report) , with an Earnings ESP of +0.83% and a Zacks Rank #1, is slated to report results on Aug 2.
DENTSPLY SIRONA Inc. (XRAY - Free Report) , with an Earnings ESP of +4.55% and a Zacks Rank #3, is expected to report quarterly numbers on Aug 4.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>