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Becton, Dickinson (BDX) Q2 Earnings: What's in the Cards?

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Becton, Dickinson and Company (BDX - Free Report) is set to report second-quarter fiscal 2017 results on Aug 3.

Becton, Dickinson has an impressive track of comfortably beating estimates in each of the four trailing quarters. In the last reported quarter, it delivered a positive earnings surprise of 3.14%, bringing the four-quarter average to 5.58%.

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

Factors at Play

Becton, Dickinson's innovative product pipeline is a key catalyst in our view. A plethora of regulatory approvals in the U.S. and International markets are helping the company to rapidly expand its product portfolio. Management at Becton, Dickinson expects that strong demand for its Pyxis ES platform and infusion pumps to be growth drivers in the fiscal second quarter. Overall for fiscal 2017, revenues are anticipated to increase approximately 4.5% to 5.0%.

Additionally, partnerships and collaborations are providing the company a competitive edge. However, an unfavorable foreign exchange rate is anticipated to remain headwind for the rest of year. Furthermore, uncertainties associated with the possibilities of a repeal of the Affordable Care Act under President Trump add to the company’s concerns.

The company’s estimate revision trend lacks luster. For the current quarter, one analyst moved south compared to no upward revision in the last two months. Over the last three months, the current quarter estimates declined from $2.47 per share to $2.44, adding to our concerns. Overall for fiscal 2017, adjusted earnings (on a currency-neutral basis) are expected in the range of $9.70 to $9.80, reflecting year-over-year growth of 13.0% to 14.0%. However, after including the estimated unfavorable impact from foreign currency, the company expects adjusted diluted earnings per share between $9.35 and $9.45, representing an increase of approximately 9% to 10%.

 

Earnings Whispers

 

Our proven model does not conclusively show that Becton, Dickinson is likely to beat on earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP: Becton, Dickinson currently has an Earnings ESP of -0.41%. This is because the Most Accurate estimate is $2.43, while the Zacks Consensus Estimate is pegged at $2.44. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Becton, Dickinson has a Zacks Rank #2 which increases the predictive power of ESP. However, a negative ESP makes surprise prediction difficult.

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.

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:

Genomic Health Inc. (GHDX - Free Report) has an Earnings ESP of +16.67% and  a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Halyard Health, Inc. (HYH - Free Report) has an Earnings ESP of +5.26% and a Zacks Rank #2.

Pfizer Inc. (PFE - Free Report) has an Earnings ESP of +1.54% and a Zacks Rank #3.

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