Earnings Preview: Johnson & Johnson

Johnson & Johnson (JNJ - Analyst Report) is scheduled to report its fourth quarter 2012 results on Jan 22, 2013 before the opening bell.

Last quarter, the company posted a 4.17% positive surprise. Let’s see how things are shaping up prior to the announcement.

Growth Factors this Past Quarter

Last quarter, Johnson & Johnson recorded growth on the back of strong product sales, despite the negative impact of currency fluctuation. Even though we expect the company to continue facing headwinds in the form of EU and Japan pricing pressure, manufacturing issues and US healthcare reform, we believe Johnson & Johnson’s diversified business model, lack of cyclicality, and strong financial position will continue to help the company pave its way through tough situations.

Earnings Whispers?

Our proven model does not conclusively show that Johnson & Johnson is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP (Read: Zacks Earnings ESP: A Better Method) and a Zacks Rank #1 (Strong Buy) or at least Zacks Rank #2 (Buy) or Zacks Rank #3 (Hold) for this to happen. This is not the case here as you will see below.

Positive Zacks ESP: This is because the Most Accurate estimate stands at $1.14 while the Zacks Consensus Estimate is higher at $1.17. That is a difference of -2.56%.

Zacks Rank #2 (Buy). Johnson & Johnson’s Zacks Rank of 2, however, increases the predictive power of ESP. That said we also need to have a positive ESP to be confident of an earnings surprise call.

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:

Sanofi (SNY - Analyst Report), Earnings ESP of 1.35% and Zacks Rank #2 (Buy)

Astrazeneca (AZN - Analyst Report), Earnings ESP of 5.80% and Zacks Rank #3 (Hold)

Onyx Pharma Inc. (ONXX - Analyst Report), Earnings ESP of 19.05% and Zacks Rank #3 (Hold)