Plexus Corp. PLXS is set to report fourth-quarter fiscal 2015 results on Oct 28, after the market closes. Last quarter, its earnings matched the Zacks Consensus Estimate. Over the past four quarters, the company has posted an average positive earnings surprise of 0.35%. Let’s see how things are shaping up for this announcement.

Factors to Consider

In the last quarter, Plexus’s earnings came in line with the Zacks Consensus Estimate but revenues lagged expectations.

We believe new program wins in the networking/communications, industrial/commercial and healthcare/life sciences sectors and global expansion will drive growth for Plexus over the long term. Moreover, the disengagement from Juniper is expected to improve its product mix. Additionally, the consolidation of the company’s production facilities in low-cost areas is expected to boost margins, going forward.

However, a mature electronic manufacturing services market and intense competition from peers remain headwinds.

For the fourth quarter of fiscal 2015, Plexus projects revenues in the range of $650 million to $680 million. Earnings are projected within 64 cents to 72 cents per share. Operating margin is expected in the range of 4.2% to 4.5%.

Earnings Whispers

Our proven model does not conclusively show that Plexus is likely to beat earnings this quarter. This 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.

Zacks ESP: Plexus has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 68 cents.

Zacks Rank: Though Plexus’ Zacks Rank #3 (Hold) increases the predictive power of ESP, we need to have a positive ESP to be confident about an earnings surprise.

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

Stocks to Consider

Here are a few companies that you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Facebook, Inc. FB with an Earnings ESP of +5.71% and a Zacks Rank #1 (Strong Buy).

Iron Mountain Inc. IRM with an Earnings ESP of +2.04% and a Zacks Rank #3.

Apple Inc. AAPL with an Earnings ESP of +1.60% and a Zacks Rank #3.

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