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Is FLIR Systems (FLIR) Set for Another Earnings Beat in Q4?


FLIR Systems Inc. FLIR is slated to report fourth-quarter 2017 results, before the opening bell on Feb 14.

In the last reported quarter, the company’s earnings trumped the Zacks Consensus Estimate by 8.3%. FLIR Systems has an average positive surprise of 1.3% in 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 ESPand a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is the case here as you will see below:

Zacks ESP: FLIR Systems has an Earnings ESP of +0.36%.You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

FLIR Systems, Inc. Price and EPS Surprise

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

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.

Factors Driving the Better-than-Expected Results

Over the past few quarters, FLIR Systems’ diverse business portfolio (in terms of geographies, products and markets) has remained a staple growth driver. Further, the company’s restructuring efforts in the past five years have helped it reap synergies and drive profitable growth, combating headwinds like currency fluctuations and tough market conditions. Solid execution along with streamlined business is helping the company drive solid improvements in backlog, adjusted gross margin, operating margin and net income. Going forward, we believe strategic restructuring activities and solid backlog levels will help it sail through difficult economic times and drive growth.

Moreover, the company remains strongly committed toward introduction of innovative products to expand its customer base and enhance foothold in new markets. For instance, since the launch of Lepton technology, the company has seen a 58% compound annual growth rate in total unit volumes. Products launched during the last reported quarter, including, three thermal imaging-equipped test and measurement products, Lepton microcamera thermal core, Infrared Guided Measurement and FLIR FB-Series are anticipated to bolster sales for the upcoming quarter. This apart, the company’s diligent CDMQ model is expected to boost the sales of its government as well as military business.

Further, the Zacks Consensus Estimate for revenues from the Surveillance segment in the to-be-reported quarter currently remains high at $166 million compared with third-quarter revenues of $147 million. Revenues from Instruments segment are also anticipated to be high with estimate of $103 million compared with reported revenues of $91 million in the prior quarter. The company’s acquired businesses, including Point Grey, Armasight and Prox Dynamics are expected to contribute to fiscal fourth-quarter sales as well.

However the fact remains that, poor economic conditions across the company’s key operating regions may hamper capital investment and consumer spending, consequently weighing on its profitability. Also, the company’s business remains prone to political uncertainty and currency volatility globally, adding to concerns.

Other Stocks to Consider

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

Churchill Downs, Incorporated CHDN has an Earnings ESP of +29.03% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Huntington Ingalls Industries, Inc. HII has an Earnings ESP of +5.32% and a Zacks Rank #1.

Lockheed Martin Corporation LMT has an Earnings ESP of +0.06% and a Zacks Rank #2.

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