Michael Kors Holding Ltd. KORS, a global luxury lifestyle company, is slated to report first-quarter fiscal 2016 results on Aug 6. In the last quarter, it posted in-line results. Let’s see how things are shaping up for this announcement.
Factors Affecting this Quarter
Michael Kors continues to heavily invest in new store openings, expansion of the existing outlets and building e-commerce infrastructure. As a result, operating costs are set to rise which will compress margins going forward. In addition, comps have started to decelerate from their historic high range. Slowdown in traffic in North America, troubled watch business, and intensifying forex headwinds are the main reasons behind this.
Comps (reported basis) in the first quarter of fiscal 2016 are expected to decline in the low-double digits. The company also anticipates currency headwinds to impact earnings by 7 cents per share in the first quarter.
Earnings Whispers
Our proven model does not conclusively show that Michael Kors is likely to beat earnings estimates 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: Michael Kors has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 75 cents.
Zacks Rank: Michael Kors carries a Zacks Rank #4 (Sell). We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) 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:
Guess' Inc. GES has an Earnings ESP of +6.67% and a Zacks Rank #1(Strong Buy).
Dean Foods Company DF has an Earnings ESP of +3.85% and a Zacks Rank #2 (Buy).
The Walt Disney Company DIS has an Earnings ESP of +2.16% and a Zacks Rank #3 (Hold).
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