Spectrum Brands Holdings, Inc. SPB is slated to report third-quarter fiscal 2015 results on Aug 5. In the last quarter, the company had delivered a negative earnings surprise of 11.5%. Let’s see how things are shaping up for this announcement.
Factors Influencing this Quarter
Spectrum Brands has underperformed the Zacks Consensus Estimate by an average of 5.3% over the past four quarters. The company’s performance in the previous quarter was mainly impacted by adverse currency fluctuations, West Coast port delays and acquisition-related costs. Though issues related to port disruptions have been resolved to a great extent, the company is still battling currency headwinds and is expected to continue witnessing high acquisition-related costs. These factors are likely to weigh on Spectrum Brands’ performance in the quarter to be reported. Nevertheless, the company’s focus on boosting sales via global expansion, innovations, introduction of new product categories and increasing customer base brings some respite to the otherwise negative scenario for the upcoming quarter.
Earnings Whispers
Our proven model does not conclusively show that Spectrum Brands 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 for Spectrum Brands is currently pegged at -3.57%. This is because the Most Accurate estimate of $1.35 stands below the Zacks Consensus Estimate of $1.40.
Zacks Rank: Spectrum Brands’ Zacks Rank #2 (Buy) increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.
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 +2.38% and a Zacks Rank #2.
Dollar Tree Inc. DLTR has an Earnings ESP of +2.94% and a Zacks Rank #3 (Hold).
Ralph Lauren Corporation RL has an Earnings ESP of +0.99% and a Zacks Rank #3.
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