We expect Deckers Outdoor Corporation (DECK), designer, producer and brand manager of innovative, niche footwear and accessories, to beat expectations when it reports first-quarter fiscal 2015 results on Jul 24. In the last quarter (the three-month transition period ended Mar 31, 2014), it posted a positive surprise of 50.0%.
Why a Likely Positive Surprise?
Our proven model shows that Deckers is likely to beat earnings because it has the right combination of two key components.
Zacks ESP: Deckers currently has an Earnings ESP of +3.05%. This is because the Most Accurate estimate stands at a loss of $1.27 per share, while the Zacks Consensus Estimate is pegged at a loss of $1.31.
Zacks Rank: Deckers carries a Zacks Rank #3 (Hold). Note that stocks with a Zacks Ranks of #1, #2 and #3 have a significantly higher chance of beating earnings estimates. The Sell-rated stocks (Rank #4 and 5) should never be considered going into an earnings announcement.
The combination of Deckers’ Zacks Rank #3 (Hold) and +3.05% ESP makes us confident of an earnings beat this release.
What is Driving the Better-than-Expected Earnings?
We believe expanding direct-to-consumer operations, omnichannel strategies, effective inventory management and optimum capital allocation augur well for Deckers to sustain its growth momentum in the quarter to be reported as well. The company’s UGG brand remains a growth driver. In the last four quarters, the company outperformed the Zacks Consensus Estimate by an average of 26.95%.
Stocks That Warrant a Look
Here are some other companies you may want to consider as our model shows that these have the right combination of elements:
Big Lots Inc. (BIG) has an Earnings ESP of +3.33% and a Zacks Rank #2 (Buy).
Williams-Sonoma Inc. (WSM) has an Earnings ESP of +1.89% and a Zacks Rank #2.
Dollar General Corp. (DG) has an Earnings ESP of +1.21% and a Zacks Rank #3.
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