Can Stryker (SYK) Pull An Earnings Surprise This Season?

Stryker Corporation (NYSE:SYK) is set to report its second-quarter 2016 earnings results on Jul 21. Last quarter, the company reported earnings of $1.24 per share, which beat the Zacks Consensus Estimate by four cents (3.3%).

Notably, Stryker posted a positive earnings surprise of 2.04% on average over the last four quarters.

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

Factors at Play

Stryker’s expanding product portfolio is the key catalyst. We believe that strong growth momentum at the Trauma & Extremities, Spine and Neurotechnology businesses will drive top-line growth.

STRYKER CORP Price and EPS Surprise

STRYKER CORP Price and EPS Surprise | STRYKER CORP Quote

Additionally, growing adoption of MAKO will drive sales in the orthopedic and reconstructive surgery market. Further, contract wins from large hospitals in the foot and ankle business present considerable growth opportunity. Moreover, frequent acquisitions will improve the company's competitive position.

For the second quarter of 2016, Stryker expects adjusted earnings in the range of $1.33 to $1.38 per share. Unfavorable foreign exchange rate is expected to impact earnings by 3 cents. Moreover, pricing pressure will continue to hurt sales at least in the near term.

Earnings Whispers

Our proven model does not conclusively show that Stryker is likely to beat earnings 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: Stryker has a Zacks ESP of 0.00%. That is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at $1.36.

Zacks Rank: Stryker has a Zacks Rank #3 which increases the predictive power of ESP; but when combined with a 0.00% ESP, it makes surprise prediction difficult.

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

Stocks to Consider

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

Gilead Sciences Inc. (NASDAQ:GILD) with earnings ESP of +6.91% and a Zacks Rank #2.

C.R. Bard Inc. (NYSE:BCR) with earnings ESP of +0.41% and a Zacks Rank #2.

The Cooper Companies (NYSE:COO) with earnings ESP of +2.64% and a Zacks Rank #2.