We expect Agilent Technologies (A - Analyst Report) to beat expectations when it reports third quarter 2013 results on Aug 14.
Why a Likely Positive Surprise?
Our proven model shows that Agilent is likely to beat earnings because it has the right combination of two key ingredients.
Positive Zacks ESP: The expected surprise prediction or ESP (Read:Zacks Earnings ESP: A Better Method), which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +1.61%. This is very meaningful and a leading indicator of a likely positive earnings surprise for shares.
Zacks Rank #3 (Hold): Note that stocks with a Zacks Rank #1, #2 and #3 have a significantly higher chance of beating earnings estimates. The sell-rated stocks (Zacks Rank #4 and #5) should never be considered going into an earnings announcement.
The combination of Agilent’s Zacks Rank #3 (Hold) and an ESP +1.61% makes us reasonably confident in looking for a positive earnings beat on Aug 14.
What is Driving the Better than Expected Earnings?
Agilent’s new products, its strong position in emerging markets, solid execution, and cost control measures are expected to lead to positive earnings surprise in the upcoming quarter.
Recently, the company announced a restructuring initiative that would, after completion, result in a reduction of its workforce by 450 and generate cost savings of around $50 million a year. Additionally, Agilent’s broader portfolio and diversification into segments with higher growth potential should help drive growth in the near future.The positive trend is seen in the trailing four-quarter average surprise of 2.29%.
Other Stocks to Consider
Agilent is not the only firm looking up this earnings season.You could, therefore, consider other stocks like:
Rambus Inc. (RMBS - Snapshot Report) , with an ESP of +42.86% and a Zacks Rank #1 (Strong Buy)
Micron Tech (MU - Analyst Report) , with an Earnings ESP of +28.57% and a Zacks Rank #2 (Buy)
InvenSense Inc. (INVN - Snapshot Report) , with an Earnings ESP of +5.26% and a Zacks Rank #3 (Hold)