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Earnings Preview: Stryker

by Zacks Equity Research

January 22, 2013 | Comments : 0 Recommended this article: (0)

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Stryker Corp. (SYK - Analyst Report) is set to report its fourth-quarter 2012 results after market closes on Wednesday, Jan 23. Let’s see how things are shaping up prior to the announcement.

In the last quarter, the orthopedic devices major posted a 1.02% negative earnings surprise. Higher domestic sales and cost containment measures were largely offset by weak international and capital equipment sales.

Factors to Consider this Past Quarter

As per the preliminary fourth-quarter results released by the company, it expects sales growth to exceed guidance on the back of improving reconstructive market fundamentals. Further, the company’s well-diversified product portfolio along with acquisitions are expected to drive growth.

Despite several short-term headwinds such as additional costs associated with product recalls, restructuring expenses along with the dilutive impact of acquisitions and other charges, the company is slated to grow its bottom line. The Zacks Consensus Estimate for the fourth quarter has moved up by a cent to $1.13 per share over the last 30 days.

Earnings Whispers?

Our proven model does not conclusively show that Stryker is likely to beat earnings estimates this quarter. That is because a stock needs to have both a positive Earnings ESP (Expected Surprise Prediction) (Read: Zacks Earnings ESP: A Better Method) as well as a Zacks Rank of #1, 2 or 3 for this to happen. This is not the case here as you will see below.

Zacks Earnings ESP: The Most Accurate estimate stands at $1.13, while the Zacks Consensus Estimate is also pegged at $1.13. This comes to a difference of 0.00%.

Zacks Rank #3 (Hold). Stryker’s Zacks Rank #3 (Hold) lowers the predictive power of ESP. The Zacks Rank #3 together with 0.00% earnings ESP makes surprise prediction difficult.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows they have the right ingredients to post an earnings beat this quarter:

NuVasive Inc. (NUVA - Snapshot Report), Earnings ESP of 72.73% and Zacks Rank #1 (Strong Buy)

Hill-Rom Holdings, Inc. (HRC - Snapshot Report), Earnings ESP of 2.27% and Zacks Rank #2 (Buy)

Becton, Dickinson and Company (BDX - Analyst Report), Earnings ESP of 3.35% and Zacks Rank #2 (Buy)

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