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Waters (WAT) to Report Q2 Earnings: What's in the Cards?

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Waters Corporation (WAT - Free Report) is set to report second-quarter 2019 results on Jul 30.

The company outpaced the Zacks Consensus Estimate in three of the trailing four quarters, delivering an average positive earnings surprise of 0.85%.

Q1 at a Glance

In the last reported quarter, Waters’ earnings of $1.6 per share missed the Zacks Consensus Estimate by 13 cents. Further, the figure improved 0.6% on a year-over-year basis but fell 44.2% sequentially.

Net sales came in $513.9 million, lagging the Zacks Consensus Estimate of $545.5 million. Further, the figure was down 3% year over year and 28.1% from the previous quarter.

Adverse effects of foreign exchange fluctuations and macro-economic headwinds in China and Europe impacted the results negatively.

Estimates for Q2

For the second quarter, Waters anticipates non-GAAP earnings in the range of $2.05-$2.15 per share. The Zacks Consensus Estimate for earnings is pegged at $2.11.

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

Waters Corporation Price and EPS Surprise

 

Waters Corporation Price and EPS Surprise

Waters Corporation price-eps-surprise | Waters Corporation Quote

Factors to Consider

Waters’ well-performing products in the analytical instrument category are likely to benefit segmental performance in the to-be reported quarter.

Waters segment is likely to benefit from the company’s strengthening high-resolution mass spectrometry portfolio and well-performing liquid chromatography instruments. BioAccord, which is the company’s robust liquid chromatography–mass spectrometry solution, is likely to aid the segment’s performance in the to-be-reported quarter.

For the second quarter, the Zacks Consensus Estimate for sales in Waters segment is pegged at $533 million, suggesting an improvement of 1.1% from the year-ago reported figure.

Additionally, the company’s robust thermal analyzers are anticipated to aid TA segment performance in the quarter under review. Further, its Discovery Thermal Mechanical Analyzer TMA 450, which is setting new industry standards, is likely to act as a tailwind. Further, the company is early in the commercialization cycle of these analyzers, which is likely to aid the upcoming quarterly results.

However, uncertainty related to ongoing Brexit political stalemate remains a concern for TA products’ momentum in Europe.

We note that the Zacks Consensus Estimate for sales in TA segment is pegged at $68 million, suggesting a decline of 1.3% from the year-ago reported figure.

Additionally, upswing in end-market sales estimates is notable. The Zacks Consensus Estimate for sales in Pharmaceutical, Industrial and Governmental & Academic (G&A) are projected at $343 million, $186 million and $75 million, respectively.

The figures are up 1.4%, 1.3% and 1.1%, respectively compared with the year-ago actual figures.

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has good chance of beating estimates if it also has a positive Earnings ESP. The Sell-rated stocks (Zacks Rank #4 or 5) are best avoided. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Waters currently has a Zacks Rank #3 and an Earnings ESP of +0.59%, making us reasonably confident of an earnings beat.

Stocks That Warrant a Look

Here are some stocks you may consider, as our proven model shows that these have the right combination of elements to post an earnings beat this quarter.

Clearway Energy (CWEN - Free Report) has an Earnings ESP of +15.00% and sports a Zacks Rank #1. The company is slated to report second-quarter 2019 results on Aug 6. You can see the complete list of today’s Zacks #1 Rank stocks here.

Warrior Met Coal (HCC - Free Report) has an Earnings ESP of +8.66% and a Zacks Rank #2. The company is scheduled to report second-quarter 2019 earnings on Jul 31.

CGI Group (GIB - Free Report) has an Earnings ESP of +1.27% and a Zacks Rank #2. The company is set to report third-quarter 2019 earnings on Jul 31.

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