Harris (HRS) To Report Q1 Earnings: Is A Surprise In Store?

Harris Corporation (NYSE:HRS) is slated to release first-quarter fiscal 2017 results on Nov 1, before the market opens.

Last quarter, Harris posted a positive earnings surprise of 0.69%. Moreover, the company’s earnings surpassed the Zacks Consensus Estimate in each of the previous four quarters, with an average beat of 4.04%.

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

Factors at Play

We are impressed with Harris’ credible customer list and new collaborations. The company’s rapid innovation and customer centric approach should favor top-line growth. We are also positive on the company’s efforts to reward shareholders through dividends/buybacks. Harris increased its quarterly dividend in Aug 2016 by 6% and this represents the 15^th consecutive annual dividend hike by the company.

Harris has high dependence on U.S. government projects, which is a major concern. In case of unforeseen events, high customer concentration increases the risks of a company. Another concern for Harris is the possibility of failing to derive the desired synergies from its acquisitions. Further, adverse foreign currency exchange movement is a risk to the bottom line and economic slowdown in several major economies raise caution. The company also faces competition in the sector from the likes of Arc Group Worldwide (NASDAQ:ARCW) and Viasat Inc. (NASDAQ:VSAT) .

Earnings Whispers

Our proven model does not conclusively show that Harris is likely to beat the Zacks Consensus Estimate this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #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: The Earnings ESP for the company stands at -4.44% as the Most Accurate estimate is $1.29 per share while the Zacks Consensus Estimate is pegged at $1.35. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.

Zacks Rank: Harris has a Zacks Rank #3 (Hold).

Please note that we advise investors not to consider Sell-rated stocks (Zacks Rank #4 or 5) going into an earnings announcement.

Stock to Consider

Here is a company you may want to consider, as our model shows that it has the right combination of elements to post an earnings beat this quarter:

Nexstar Broadcasting Group (NASDAQ:NXST) is scheduled to report third-quarter earnings on Nov 8. It has an earnings ESP of +12.64% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

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