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Can AngioDynamics (ANGO) Pull a Surprise in Q2 Earnings?

AngioDynamics Inc. ANGO is set to report second-quarter fiscal 2018 results on Jan 4, before market opens. Last quarter, the company reported adjusted earnings of 12 cents per share, which missed the Zacks Consensus Estimate by 4 cents.

On an average, AngioDynamics delivered a positive earnings surprise of 9.79% in the trailing four quarters. However, a lackluster price performance over the last year and high debt levels continue to hinder the company. AngioDynamics’ shares have returned a mere 0.7% compared with the industry’s rally of 24%.

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

Factors at Play

Strong Product Portfolio: AngioDynamics’ wide array of products like AngioVac, BioFlo and NanoKnife enhances market opportunities. Notably, the PV business (peripheral vascular sales) has also built a strong momentum. AngioDynamics has been experiencing growth in other product families like Food Management, Thrombus Management, BioFlo products and NanoKnife disposables in the Oncology section.

Solero MTA System to Drive Growth: The company rides on the market’s solid response to Solero Microwave Tissue Ablation (MTA) system, especially within the Microwave Ablation space. The platform is intended to be used for the ablation of soft tissue during open procedures. Per management, Solero was the primary driver for the whopping 11% year-over-year increase in the oncology surgery sales last quarter.

Robust Fundamental Growth Story: Over the last 4 years, the company’s sales witnessed a CAGR of 0.3%, whereas, earnings per share saw a CAGR of 11.3%. The company expects to benefit from the ongoing market transition toward less invasive interventional procedures in the upcoming years.

Unfavorable Estimate Revision Trend: The estimate revision trend for the current quarter has been unfavorable for AngioDynamics. In the current quarter, the Zacks Consensus Estimate for revenues fell 1.4% year over year to $87.80 million. Further, the Zacks Consensus Estimate for earnings declined 12.3% to 17 cents per share on a year-over-year basis.

AngioDynamics, Inc. Price and EPS Surprise

AngioDynamics, Inc. Price and EPS Surprise | AngioDynamics, Inc. Quote

Earnings Whispers

However, our quantitative model does not conclusively show earnings beat for AngioDynamics in this quarter. This is because a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to be able to beat estimates. This is not the case here, as you will see below.

Zacks ESP: AngioDynamics currently has an Earnings ESP of 0.00%. This is because the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 17 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: AngioDynamics currently carries a Zacks Rank #3 which increases the predictive power of ESP. However, an ESP of 0.00% makes surprise prediction difficult. We caution against stocks with a Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revision momentum.

Stocks to Consider

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

Edwards Lifescience Corp. EW has an Earnings ESP of +0.3% and a Zacks Rank #3.

Thermo Fisher Scientific Inc. TMO has an Earnings ESP of +0.9% and a Zacks Rank #3.

Medtronic PLC MDT has an Earnings ESP of +0.6% and a Zacks Rank #3.

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