Spectrum Brands Holdings Inc. (SPB) is scheduled to report its third-quarter fiscal 2014 results before the market opens on Jul 30. Last quarter, this global consumer products company posted a negative earnings surprise of approximately 2.7%. Let's see how things are shaping up for this announcement.
Factors Affecting this Quarter
Spectrum Brands is poised to witness remarkable growth in the year ahead driven by its emphasis on expansions and acquisitions as well as cost-cutting measures and implementation of a better pricing strategy. However, we cannot ignore the near-term headwinds such as sluggish U.S. economic growth, rising raw material costs and volatile foreign currency exchange rates which could negatively impact its financials. Keeping this in view, we are not very optimistic about the company’s upcoming results.
Earnings Whispers?
Our proven model does not conclusively project Spectrum Brands as likely to beat earnings this quarter. A stock needs to have both a positive Earnings ESP (Expected Surprise Prediction) and a Zacks Rank #1, 2 or 3 to surpass earnings estimates. However, that is not the case here due to the following factors:
Zacks ESP: ESP for Spectrum Brands is 0.00% since the Most Accurate Estimate stands at $1.29 per share, which is in line with the Zacks Consensus Estimate.
Zacks #3 Rank (Hold): Spectrum Brands’ Zacks Rank #3 increases the predictive power of ESP. However, we need to have a positive ESP to be confident of an earnings surprise call. We caution against stocks with a Zacks Rank #4 and 5 (Sell-rated stocks) going into earnings announcement, especially when the company is undergoing negative estimate revisions.
Other Stocks to Consider
Here are some other companies you may want to consider as our model shows that they have the right combination of elements:
Avis Budget Group, Inc. (CAR) has an Earnings ESP of +3.18% and a Zacks Rank #1 (Strong Buy).
Archer Daniels Midland Co. (ADM) has an Earnings ESP of +5.26% and a Zacks Rank #2 (Buy).
Sotheby’s (BID) has an Earnings ESP of +3.47% and a Zacks Rank #2.
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