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Can FLIR Systems (FLIR) Deliver Another Beat in Q3 Earnings?

Zacks Equity Research

FLIR Systems Inc. FLIR is slated to report third-quarter 2017 results, before the opening bell on Oct 25.

In the last reported quarter, the company’s earnings trumped the Zacks Consensus Estimate by 2.4%, which the company managed to do after eight quarters. FLIR Systems has an average negative surprise of 1.3% for the trailing four quarters.

We expect FLIR Systems to score an earnings beat in the to-be-reported quarter as well.

Why a Likely Positive Surprise?

Our proven model shows that FLIR Systems has the right combination of the two key ingredients. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold) for this to happen. This is perfectly the case here as you will see below:

Zacks ESP: FLIR Systems has an Earnings ESP of +2.08%, as the Most Accurate estimate of 49 cents is pegged above the Zacks Consensus Estimate of 48 cents.You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company carries a Zacks Rank #3, which when combined with a positive ESP, makes us reasonably confident of an earnings beat.

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

Growth Factors in This Past Quarter

FLIR Systems’ diverse portfolio has been a staple growth driver, helping it offset weaknesses associated with any one market. The company’s restructuring efforts in the past five years have allowed it to streamline business operations and optimize growth. Key metrics like revenues, operating income, operating margin and adjusted EPS have materially benefited from such actions. We expect this trend to continue in the soon-to-be-reported quarter as well.

FLIR Systems, Inc. Price, Consensus and EPS Surprise

FLIR Systems, Inc. Price, Consensus and EPS Surprise | FLIR Systems, Inc. Quote

In addition, impressive traction of FLIR Systems’ products, featuring the Lepton thermal microcamera core, is anticipated to boost the top line significantly. Since the launch of the Lepton technology, the company has witnessed a 58% compound annual growth rate in total unit volumes. Products launched during the year — including X6900sc SLS, X8500sc SLS cameras, upgraded version of FLIR M-series thermal cameras and third-generation FLIR ONE(R) and FLIR ONE Pro thermal imaging cameras — are expected to ramp up sales for the quarter under review.

Moreover, FLIR Systems’ keen eye for strategic acquisitions is likely to be conducive to its inorganic growth. Previously completed acquisitions, including Armasight, DVTEL and Dynamics, are expected to boost the company’s top-line performance. Additionally, the company’s diligent CDMQ model will likely compound the sales of its government and military business, which should reflect well on its top line.

Stocks That Warrant a Look

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

Terex Corporation TEX, with an Earnings ESP of +3.17% and a Zacks Rank of 2, is expected to release quarterly numbers around Nov 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

CNH Industrial N.V. CNHI, with an Earnings ESP of +8.11% and a Zacks Rank of 2, is slated to report results on Oct 31.

Rockwell Collins, Inc. COL, with an Earnings ESP of +2.23% and a Zacks Rank of 2, is expected to report quarterly figures around Oct 27.

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