We expect Under Armour, Inc. (UA), one of the leading designers, marketers, and distributors of authentic athletic footwear, apparel, and accessories, to beat expectations when it reports third-quarter 2014 results on Oct 23. In the last quarter, the company had reported earnings of 8 cents a share that met the Zacks Consensus Estimate.
Why a Likely Positive Surprise?
Our proven model shows that Under Armour is likely to beat earnings estimate this quarter. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 or 2 or 3 for this to happen. Under Armour has the right combination of the two key components.
Zacks ESP: Under Armour currently has an Earnings ESP of +2.50%. This is because the Most Accurate estimate stands at 41 cents, while the Zacks Consensus Estimate is pegged at 40 cents.
Zacks Rank: Under Armour carries a Zacks Rank #2 (Buy), which increases the predictive power of ESP. The Sell-rated stocks (Rank #4 and 5) should never be considered going into an earnings announcement.
What is Driving the Better-than-Expected Earnings?
Under Armour’s sustained focus on brand development, direct-to-consumer business expansion, product innovation and foray into the technology-based fitness business are likely to benefit the quarter.
Other 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:
The Kroger Co. (KR) has an Earnings ESP of +3.28% and a Zacks Rank #2.
L Brands, Inc. (LB) has an Earnings ESP of +3.13% and a Zacks Rank #2.
The Home Depot, Inc. (HD) has an Earnings ESP of +0.89% and a Zacks Rank #2.
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