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Can PerkinElmer (PKI) Spring a Surprise in Q2 Earnings?

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Headquartered in Waltham, MA, PerkinElmer, Inc. (PKI - Free Report) provides scientific instruments, consumables, and services to pharmaceutical, biomedical, environmental testing, chemical, and general industrial markets worldwide. The company is expected to release second-quarter fiscal 2017 results on Aug 3, after the closing bell.

PerkinElmer reported first-quarter adjusted earnings per share of 55 cents, beating the Zacks Consensus Estimate by a penny. Notably, adjusted earnings surpassed management’s guided range of 52 cents to 54 cents. The company reported adjusted revenues of $514.3 million, which comfortably beat the Zacks Consensus Estimate of $506 million. Interestingly, revenues were above management’s guided range of $500–$510 million.

Let’s take a look at how things are shaping up prior to the second-quarter earnings announcement.

Factors to Consider

Guidance Upbeat: For the second quarter of 2017, PerkinElmer projects revenues in the range of $550 million to $555 million, which represents organic revenue growth of approximately 3% to 4%. Notably, this includes a 2% foreign exchange headwind. Second-quarter adjusted earnings per share are forecasted in the range of 66 cents to 68 cents.

Expansion in Asia: PerkinElmer acquired Goa, India-based Tulip Diagnostics Private Ltd for an undisclosed amount. Although Tulip was acquired in early January, we are bullish about the buyout as it will help PerkinElmer tap into the opportunities in the emerging market of diagnostics. The takeover is also likely to strengthen PerkinElmer’s foothold in the infectious disease testing space.

Foreign Exchange Volatility: Increasing exposure to the international markets enhances the risk of foreign exchange volatility. The fluctuations in currency exchange rates can adversely impact the company’s international sales. Due to the sluggish European economy, revenues and earnings are likely to be affected adversely if the company does not hedge from exposure to currency fluctuations.

Estimate Revision: PerkinElmer’s estimate revision trend remained stable at the moment. For the current quarter, one analyst moved south, compared to no upward revision in the last two months. The current quarter earnings estimates stand at 67 cents per share.

Earnings Whispers

Our proven model does not conclusively show an earnings beat for PerkinElmer this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to be able to beat estimates. This is not the case here, as you will see below.

Zacks ESP: The Earnings ESP for PerkinElmer is 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate stand at 67 cents per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: PerkinElmer currently carries a Zacks Rank #2. Though a favorable Zacks Rank increases the predictive power of ESP, the company’s 0.00% ESP makes surprise prediction difficult.

Meanwhile, we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

PerkinElmer, Inc. Price and EPS Surprise


PerkinElmer, Inc. Price and EPS Surprise | PerkinElmer, Inc. Quote

Stocks that Warrant a Look

Here are a few companies you may want to consider as our proven model shows that they have the right combination of elements to post an earnings beat this quarter:

Haemonetics Corporation (HAE - Free Report) has an Earnings ESP of +3.23% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Halyard Health, Inc. has an Earnings ESP of +5.26% and a Zacks Rank #2.

Bio-rad Laboratories, Inc. (BIO - Free Report) has an Earnings ESP of +23.81% and a Zacks Rank #3.

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