What's in the Offing for Waters Corp (WAT) in Q4 Earnings?

Waters Corporation WAT is set to report fourth-quarter 2018 results on Jan 23.

The company outpaced the Zacks Consensus Estimate in the trailing four quarters, delivering average positive earnings surprise of 2.02%.

In the last reported quarter, Waters’ earnings of $1.92 per share recorded a positive surprise of 1.05% and surged 8.5% on a year-over-year basis. However, the figure declined 1.5% sequentially.

Net sales also decreased 3.1% sequentially but improved 2.2% year over year to $578.02 million. However, the figure missed the Zacks Consensus Estimate of $588.1 million.

Robust end-market results especially in the Governmental & Academic market drove year-over-year top-line growth. Further, it was aided by the company’s strong momentum across Asia.

For the fourth quarter, Waters expects non-GAAP earnings in the range of $2.55-$2.65 per share. The Zacks Consensus Estimate for earnings is pegged at $2.65 per share.

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

Segmental Performance to Aid Growth

Waters is riding on its robust product portfolio in the analytical instruments space. This is likely to benefit the company’s fourth-quarter results.

Notably, the company’s product are categorized into two segments—Waters and TA.The segments areexpected to continue aiding its end-market performance.

For the fourth quarter, the Zacks Consensus Estimate for sales in Waters segment is pegged at $615 million, up 2.1% year over year when compared with actuals. Well-performing chromatography instruments are anticipatedto drive sales within this segmentbacked bysolid momentum across product pipelines such as Acuity Arc Bio and Acuity Plus. Further, launch of the company’s advanced screening system namely RenataDX is a major positive.

Moreover, the Zacks Consensus Estimate for sales in TA segmentis pegged at $87 million, up 2.6% on a year-over-year basis. The company’s innovative thermal analyzers and strengthening orders are expected to continue aiding growth in this segment.

Waters Corporation Price and EPS Surprise

 

Waters Corporation Price and EPS Surprise | Waters Corporation Quote

End-Market Momentum

End-market performance remains one of the key growth factor for Waters.

Notably, the Zacks Consensus Estimate for sales in Pharmaceutical, Industrial and Governmental & Academic (G&A) end-markets is pegged at $382 million, $224 million and $100 million, respectively.

When compared with the actuals, sales in Pharmaceutical are up 2.3% year over year. The company is gaining traction in the U.S. pharma market. Improving spending by large pharma customers in the United States is likely to bolster Waters’ performance in this end-market in the quarter under review.

Further, sales in the industrial market are up 3.3% from the prior-year quarter. Growing opportunities across the environmental applications, food, safety and material characterization spaces continue to boost demand for the company’s robust product pipelines. This is anticipated to aid Waters’ sales in this market.

G&A market in which Waters’ performance is improving and contributes significantly to its top-line growth remains a major tailwind. Sales in this market are up 3% year over year compared with last year’s actual figure.

We believe all the above-mentioned growth factors are anticipated to drive the company’s result in the to-be-reported quarter.

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has good chance of beating estimates if it also has a positive Earnings ESP. The Sell-rated stocks (Zacks Rank #4 or 5) are best avoided. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Waters currently has a Zacks Rank #3 and an Earnings ESP of +2.45%, which indicates that the company is likely to beat estimates in the to-be-reported quarter.

Other Stocks That Warrant a Look

Here are some other stocks worth considering as our model shows that these too have the right combination of elements to deliver an earnings beat in the upcoming releases.

Amazon AMZN has an Earnings ESP of +0.68% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Square SQ has an Earnings ESP of +6.6% and a Zacks Rank #2.

Agilent Technologies A has an Earnings ESP of +2.74% and a Zacks Rank #3.

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