Will Agilent (A) Miss Estimates this Earnings Season? - Analyst Blog
Agilent Technologies Inc. (A) is set to report fiscal first-quarter 2015 results on Feb 17. Last quarter, it posted a 76.00% positive surprise. Let’s see how things are shaping up for this announcement.
Factors at Play
Agilent delivered encouraging fiscal fourth quarter 2014 results with the bottom line beating the Zacks Consensus Estimate and the top line matching the same. Earnings increased 12.8% sequentially and 8.6% on a year over year basis. Revenue growth and sustained improvements in cost efficiency led to the increase in earnings.
Agilent completed the spinoff of its electronic measurement segment into a new company named Keysight Technologies, making it an independent, publicly traded company. It also recently exited from its Nuclear Magnetic Resonance (NMR) business since it failed to meet growth and profitability goals. It had started the NMR business in 2010, with the purchase of Varian.
Also, its decision to divest the underperforming EM business and exiting non-profitable business makes perfect sense under the circumstances. This will enable the company to focus on the new Agilent (consisting of Life Science, Chemical Analysis, and Diagnostics and Genomics businesses) and will enable management to expand recurring revenues and diversify geographic operations.
In addition, we remain positive on Agilent’s broader portfolio and increased focus on segments with a higher growth potential. Further, the company continues to introduce new products (with higher margins), which continue to improve its margin profile.
For the first quarter, Agilent expects revenues of $1.02 billion to $1.04 billion and earnings in the range of 39 cents to 43 cents a share.
Earnings Whispers?
Our proven model does not conclusively show that Agilent Technologies will beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, currently stands at -4.88%. This is because the Most Accurate estimate of 39 cents is lower than the Zacks Consensus Estimate of 41 cents.
Zacks Rank: Agilent carries a Zacks Rank #4 (Sell). We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Agilent has witnessed two downward revisions for the current quarter over the past one month and no upward revision.
Stocks to Consider
Here are some other companies, which you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Assured Guaranty Ltd. (AGO) has an Earnings ESP of +13.04% and a Zacks Rank #1 (Strong Buy).
BioTelemetry, Inc. (BEAT) has an Earnings ESP of +20.00% and a Zacks Rank #1.
Impax Laboratories Inc. (IPXL) has an Earnings ESP of +27.27% and a Zacks Rank #1.
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