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Can Greatbatch (GB) Keep the Earnings Streak Alive in Q4?

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We expect Greatbatch Inc. () to beat earnings when the company reports its fourth quarter and full year 2014 financial numbers on Feb 24.

Last quarter, the company’s earnings had surpassed the Zacks Consensus Estimate by 12.3%. Moreover, Greatbatch outpaced our estimates in three of the past four quarters, with an average earnings beat of 4.6%.

Let’s see how things are shaping up for this announcement.

What is Driving the Better-than-Expected Earnings?

Greatbatch is focused on achieving growth through strategic investments, manufacturing efficiencies, operating cost curtailments. The company continues to invest heavily in research and development (R&D) in order to develop innovative medical devices, which will help Greatbatch gain a significant foothold in the competitive medical device market.

Greatbatch also boasts an encouraging product pipeline with the most notable product being Algovita spinal cord stimulator, designed for chronic pain treatment in the trunk and limbs. New products targeted for the vascular, CRM/neuromodulation and orthopedic markets are also expected to offer incremental revenue opportunities, going forward.

Why a Likely Positive Surprise?

Our proven model shows that Greatbatch is likely to beat earnings because it has the right combination of two key ingredients.

Zacks ESP: Greatbatch’s Earnings ESP stands at +1.70%. This is because the company’s Most Accurate estimate is poised at 60 cents, whereas the Zacks Consensus Estimate is pegged a tad lower at 59 cents. A favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive earnings surprise.  

Zacks Rank: Greatbatch currently has a Zacks Rank #3 (Hold). Note that stocks with Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating earnings estimates. Conversely, Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.

The combination of Greatbatch’s Zacks Rank #3 and +1.70% ESP makes us reasonably confident of a positive earnings beat this quarter.

Other Stocks to Consider

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

Impax Laboratories (IPXL - Free Report) has an earnings ESP of +27.27% and a Zacks Rank #1.

ACADIA Pharmaceuticals (ACAD - Free Report) has an earnings ESP of +3.85% and a Zacks Rank #2.

Hyperion Therapeutics has an earnings ESP of +15.38% and a Zacks Rank #2.




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