Is A Beat In The Cards For Harris (HRS) In Q3 Earnings?

Harris Corporation (NYSE:HRS) is slated to release third-quarter fiscal 2017 results on May 3, before the market opens.

In the last quarter, the company reported a positive earnings surprise of 3.65%. Moreover, the company’s earnings surpassed the Zacks Consensus Estimate in each of the previous four quarters, with an average beat of 2.72%.

Harris gained 1.43% over the last one month, outperforming the Zacks categorized Wireless Equipment industry’s decline of 3.06%.

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

Why a Likely Positive Surprise?

Our proven model shows that Harris is likely to beat the Zacks Consensus Estimate this quarter because it has the perfect combination of two key ingredients.

Zacks ESP: The Earnings ESP for the company is +3.05% as the Most Accurate estimate is pegged at $1.35 per share while the Zacks Consensus Estimate is at $1.31. A favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Harris carries a Zacks Rank #3 (Hold). Please note that stocks with Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating earnings estimates.

Meanwhile, Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.

Factors at Play

We are impressed with the company's efforts to reward shareholders. During the fiscal second quarter, the company’s board of directors declared a quarterly cash dividend of 53 cents per share. The company's efforts to expand also encourage us. In Feb 2017, the company launched Falcon III RF-300H wideband manpack radio that provides higher security and better wideband HF.

In spite of the tailwinds, the company continues to grapple with revenue-related issues. Though positive on Harris' growth by acquisition strategy, we note that all acquisitions involve integration risks. Failure to successfully integrate the newly acquired companies into its own business model may result in difficulties for Harris. Moreover, weakness in international markets may result in lower-than-expected sales of tactical radio products. Also, Harris is a highly leveraged company which again is a dampener.

Other Stocks to Consider

Investors interested inthe broader computer and technology sector may also consider the following stocks. This is because our model shows that these companies also possess the right combination of elements to post an earnings beat this quarter.

Apple Inc. (NASDAQ:AAPL) has an Earnings ESP of +1.00% and a Zacks Rank #3. The company is expected to report second-quarter 2017 results on May 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

AMTEK, Inc. (NYSE:AME) has an Earnings ESP of +1.79% and a Zacks Rank #2. The company will release its first-quarter 2017 earnings on May 2.

Apptio Inc. (NASDAQ:APTI) has an Earnings ESP of +8.33% and a Zacks Rank #3. The company will release its first-quarter 2017 earnings on May 4.

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