Brown-Forman Corporation (BF.B) is slated to report its second-quarter fiscal 2015 results on Dec 3, before the opening bell. In the last quarter, the company had delivered a negative earnings surprise of 4.11%. Let’s see how things are shaping up for this announcement.
Factors Influencing this Quarter
Although Brown-Forman missed top and bottom-line estimates in the previous quarter, it displayed a year-over-year improvement in both, and also issued an optimistic outlook for fiscal 2015. We believe that the company’s consistent focus on developing its premium Jack Daniel’s brand through innovation and packaging changes has paid off, making it a thriving company. Moreover, we expect its pricing strategy, product innovation and penetration in emerging markets to drive growth. However, at the same time we remain cautious of the rising tension between Russia and the West, stiff competition as well as risks arising from international market operations, which may adversely impact the company’s performance.
Earnings Whispers?
Our proven model does not conclusively show that Brown-Forman 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. This is not the case here, as you will see below:
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is currently pegged at 0.00%. This is because the Most Accurate estimate and the Zacks Consensus Estimate both stand at $1.05.
Zacks Rank: Brown-Forman carries a Zacks Rank #3 (Hold). Though Zacks Rank #1, 2 or 3 increases the predictive power of ESP, the company’s ESP of 0.00% makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks that Warrant a Look
Here are some 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:
DSW Inc. (DSW) has an Earnings ESP of +7.69% and a Zacks Rank #2 (Buy).
Best Buy Co., Inc. (BBY) has an Earnings ESP of +4.17% and a Zacks Rank #2.
Zumiez, Inc. (ZUMZ) has an Earnings ESP of +3.85% and a Zacks Rank #2.
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