URS Corporation (URS) is set to report first-quarter 2014 results after the markets close on May 13. The company delivered a positive surprise of 36.8% in the last quarter. Let’s see how things are shaping up for this announcement.
Factors to Influence This Quarter
During the first quarter, uncertain macro economic conditions and currency headwinds continued to be a drag. In addition, URS was facing delays in procurement decisions and reduction in anticipated spending in the defense sector.
With the passing of President Obama’s $1.1 trillion Omnibus spending measure in Jan 2014, the budgetary woes ebbed and the U.S. Department of Defense resumed efforts to strengthen its artillery. As a result of the resumptions, the company received a couple of orders.
The bill allows Pentagon to utilize as much as $93 billion for buying weapons and another $63 billion for advancing research and development in the sector. The company’s Oil & Gas division continues to perform well.
Our proven model does not conclusively show that URS 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, 2 or 3 for this to happen. That is not the case here, as you will see below.
Negative Zacks ESP: That is because the Most Accurate Estimate stands at $0.65 while the Zacks Consensus Estimate is higher at $0.67. This translates into a difference of -2.99%.
Zacks Rank #4 (Sell): URS Corporations’ Zacks Rank reduces the predictive power of ESP because the Zacks Rank #4, when combined with a negative ESP, makes surprise prediction difficult.
We caution against stocks with Zacks #4 and 5 Ranks (Sell-rated stocks) going into the earnings announcement, especially when the company is witnessing negative estimate revisions momentum.
Other Stocks to Consider
Here are some other companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
NRG Yield, Inc. (NYLD) with Earnings ESP of +40.00% and Zacks #2 Rank (Buy).
Vectren Corp. (VVC) with Earnings ESP of +1.39% and Zacks #2 Rank.
Embraer SA (ERJ) with Earnings ESP of +1.79% and Zacks #2 Rank.
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NRG YIELD INC-A (NYLD): Free Stock Analysis Report
URS CORP (URS): Free Stock Analysis Report
VECTREN CORP (VVC): Free Stock Analysis Report
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