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Will Stryker (SYK) Deliver a Beat this Earnings Season?

Stryker Corporation SYK, a leading player in the medical technology space, is set to report second-quarter 2017 results on Jul 27 after the bell.

Last quarter, the company posted earnings of $1.48 per share, which surpassed the Zacks Consensus Estimate by 5 cents. Notably, on an average, Stryker beat the Zacks Consensus Estimate by almost 2.08% over the last four quarters. Let’s see how things are shaping up prior to this release.

Why a Likely Positive Surprise?

Our proven model shows that Stryker is likely to beat estimates because it has the right combination of the two key ingredients.

Zacks ESP: Stryker’s Earnings ESP is +0.66% as the Most Accurate estimate of $1.52 is higher than the Zacks Consensus Estimate of $1.51. A favorable ESP serves as a meaningful indicator of a likely positive surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Stryker currently has a Zacks Rank #2 (Buy). Note that stocks with a Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) have a significantly higher chance of beating earnings estimates. Conversely, Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.

The combination of Stryker’s favorable Zacks Rank and positive ESP makes us reasonably confident of a beat.

Stryker Corporation Price and EPS Surprise

 

Stryker Corporation Price and EPS Surprise | Stryker Corporation Quote

Factors at Play

For the second quarter of 2017, Stryker expects adjusted earnings per share in the range of $1.48–$1.52. Notably, this indicates a rise of 6.5% to 9.4% on a year-over-year basis. We believe that the growing adoption of MAKO robots will drive sales in the orthopedic and reconstructive surgery market. Additionally, Stryker is well poised on the acquisitions of both Sage and Physio-Control in the past.

For the full year, the company expects adjusted earnings in the band of $6.35 to $6.45. Stryker expects organic sales growth of 5.5% to 6.5% for full-year 2017. The tie-up with Indo UK Institute of Health’s Medicity Program is an important factor as well. Notably, this is a 20-year partnership that aims to offer primary joint replacements (orthopedic areas of hip, knee and trauma products) and healthcare services in India at low costs.

The company’s estimate revision trend is encouraging. For the current quarter, Stryker saw two upward estimate movements with no movement in the opposite direction over the last one month. Current quarter estimate for earnings per share is pegged at $1.51.

Stocks that Warrant a Look

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

Becton, Dickinson and Company BDX has an Earnings ESP of +0.41% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Align Technology, Inc. ALGN has an Earnings ESP of +1.37% and a Zacks Rank #2.

Thermo Fisher Scientific Inc. TMO has an Earnings ESP of +0.44% and a Zacks Rank #2.

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Thermo Fisher Scientific Inc (TMO): Free Stock Analysis Report
 
Stryker Corporation (SYK): Free Stock Analysis Report
 
Align Technology, Inc. (ALGN): Free Stock Analysis Report
 
Becton, Dickinson and Company (BDX): Free Stock Analysis Report
 
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