Will CareFusion Corp. (CFN) Miss Earnings Estimates?


CareFusion Corporation (CFN) is set to release its fourth quarter and fiscal 2014 results on Aug 7, after the closing bell. In the last quarter, the company posted a negative earnings surprise of 4.76%. Let’s see how things are shaping up for this announcement.

Growth Factors This Past Quarter

CareFusion’s products are considered among top-spending priorities of healthcare providers given the pressing need for implementing infusion or dispensing technologies. The company is also poised to grow globally through acquisitions, mainly through its recent acquisition of Vital Signs division of GE Healthcare. The acquisition will not only expand CareFusion’s Specialty Disposables business under the Procedural Solutions segment internationally but also establish itself as a leader in the $3 billion market for respiratory and anesthesia consumables.

CareFusion upgraded its revenues and earnings guidance for fiscal 2014. The company expects revenues to grow between 5 and 7%, up from the prior range of 4 to 7% and organic revenues to grow between 2 and 4%, up from the prior outlook of 1 to 4%, both on a constant currency basis for the year.

Adjusted earnings continue to expect to lie in the range of $2.30 to $2.40 per share, up 8.5–13.2% from $2.12 in fiscal 2013. The Zacks Consensus Estimate of $2.31 lies within the guided range.

Earnings Whispers?

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

Zacks ESP:  Earnings ESP, the difference between the Most Accurate Estimate of 72 cents and the Zacks Consensus Estimate of 73 cents, stands at –1.37%.

Zacks Rank #3 (Hold): The combination of CareFusion’s Zacks Rank #3 (Hold) and negative ESP makes surprise prediction difficult. We caution against stocks with Zacks #4 and #5 Ranks (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

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

Curis, Inc. (CRIS), Earnings ESP of 33.33% and a Zacks Rank #1 (Strong Buy).

Myriad Genetics Inc. (MYGN), Earnings ESP of 4.35% and a Zacks Rank #1 (Strong Buy).

Medtronic, Inc. (MDT), Earnings ESP of 1.09% and a Zacks Rank #2 (Buy).

Read the Full Research Report on CFN
Read the Full Research Report on MDT
Read the Full Research Report on MYGN
Read the Full Research Report on CRIS

Zacks Investment Research

View Comments (0)