HARMAN International Industries, Inc. HAR is expected to report first-quarter fiscal 2017 results on Nov 3. Last quarter, it posted a negative earnings surprise of 2.61%. HARMAN has posted positive earnings surprises in three out of the trailing four quarters, resulting in an average positive earnings surprise of 2.40%.

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

Factors at Play

HARMAN is one of the leading providers in the car infotainment space. The growing demand for connected cars bodes well for the company’s cloud business. Apart from this, its strong manufacturing capacities, growing product pipeline, solid patent portfolio and accretive acquisitions are the other positives.

In the to-be-reported quarter, the company collaborated with the likes of Baidu, AT&T T, Brightstar Corp. and others, which are likely to drive its top line growth.

However, a major concern for the company is the sluggishness in the U.S. auto market. This is because Harman is exposed to some serious customer concentration risks with its top four customers accounting for approximately half of its revenues. In addition, rising competition (and the resulting pricing pressure) and sluggish growth in its Professional Solutions segment remain headwinds.

Earnings Whispers

Our proven model does not conclusively show that Harman will beat earnings this quarter. This 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: Harman currently has an Earnings ESP of +0.65%.  This is because the Most Accurate estimate stands at $1.55 whereas the Zacks Consensus Estimate stands at $1.54. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.

Zacks Rank: Harman has a Zacks Rank #4 (Sell). We caution against stocks with a Zacks Rank #4 and 5 (Strong Sell) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

HARMAN INTL IND Price, Consensus and EPS Surprise

HARMAN INTL IND Price, Consensus and EPS Surprise | HARMAN INTL IND Quote

Stocks to Consider

Here are a couple of stocks that, as per our model, also have the right combination of elements to post an earnings beat this quarter:

Stratasys Ltd. SSYS with an Earnings ESP of +41.67% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Asure Software Inc. ASUR, with an Earnings ESP of +14.29% and a Zacks Rank #2.

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