Can Pall (PLL) Surprise this Earnings Season? - Analyst Blog

Pall Corporation PLL is set to report its third-quarter fiscal 2014 results before the opening bell on May 29. The company recorded a positive earnings surprise of 2.50% in the last quarter. Further, it delivered positive earnings surprises in trailing 4 quarters with an average beat of 1.9%. Let's consider some important issues that may affect the upcoming results.

Growth Factors in the Past Quarter

Pall Corporation enjoys remarkable financial returns and healthy growth prospects due to its superior technology, reliable global distribution network, notable acquisition strategy, strong presence in niche markets, long and close working histories with customers, few competitors and solid product quality supplemented by technical service. The company's biopharmaceutical business is expected to grow significantly in the long run driven by increased funding in biotechnological research, rising demand for single use and disposable products and an increasing number of drugs and vaccines getting approval over time.

Further, cost reduction and restructuring initiatives taken by the company have resulted in higher revenues and orders. Pall Corporation appears to be taking a more determined approach to cost management through its business realignment and core programs. The company saved $50 million during fiscal 2013 by reducing Selling, General & Administrative Expense (SG&A) expenses along with other operating costs. It expects to save another $50 million in the next couple of years.

Earnings Whispers

Our proven model does not conclusively show that Pall Corporation is likely to beat estimates this quarter. This is because a stock needs to have both positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here as you will see below:

Zacks ESP:The Earnings ESP for Pall Corporation stands at 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at 83 cents per share.

Zacks Rank:Pall Corporation's Zacks Rank #3 (Hold) lowers the predictive power of ESP. When combined with 0.00% ESP, the Zacks Rank #3 fails to conclusively predict an earnings surprise for Pall Corporation. Meanwhile, we caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement. 

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:

Embraer SAERJ, with an Earnings ESP of +1.79% and a Zacks Rank #1 (Strong Buy).

NRG Yield, Inc.NYLD, with an Earnings ESP of +44.00% and a Zacks Rank #2 (Buy).

ESCO Technologies Inc. ESE, an Earnings ESP of +5.26% and a Zacks Rank #2.