We expect Coach, Inc. (COH), the designer and marketer of fine accessories and gifts, to beat expectations when it reports first-quarter fiscal 2015 results on Oct 28. In the last quarter, the company had posted a positive earnings surprise of 9.3%. Let’s see how things are shaping up for this announcement.
Why a Likely Positive Surprise?
Our proven model shows that Coach is likely to beat earnings estimates this quarter. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. Coach has the right combination of the two key components.
Zacks ESP: Coach currently has an Earnings ESP of +6.67%. This is because the Most Accurate estimate stands at 48 cents, while the Zacks Consensus Estimate is pegged at 45 cents.
Zacks Rank: Coach carries a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1, 2 or 3 have a significantly higher chance of beating earnings estimates. Conversely, the Sell-rated stocks (Rank #4 and 5) should never be considered going into an earnings announcement.
Coach’s Zacks Rank #3 and ESP of +6.67% make us reasonably confident of a positive earnings beat.
What is Driving the Better-than-Expected Earnings?
Coach’s proven strategy of investing in stores to enhance sales productivity through product innovation, compelling pricing strategy, new merchandise assortments and a cost-effective global sourcing model, should favorably impact the quarter. In the trailing four quarters, the company has outperformed the Zacks Consensus Estimate by 4.2%.
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 to post an earnings beat this quarter:
L Brands, Inc. (LB) has an Earnings ESP of +3.13% and a Zacks Rank #2 (Buy).
Buffalo Wild Wings Inc. (BWLD) has an Earnings ESP of +0.94% and a Zacks Rank #3.
The Home Depot, Inc. (HD) has an Earnings ESP of +0.89% and a Zacks Rank #3.
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