Deckers Outdoor Corp. DECK, a leading designer, producer, and brand manager of innovative, niche footwear and accessories, is slated to report third-quarter fiscal 2016 results on Feb 4. The big question facing investors is, whether the company will be able to deliver a positive earnings surprise in the quarter to be reported. In the second and first quarters, the company outperformed the Zacks Consensus Estimate by 3.7% and 5.3%, respectively. Let’s see how things are shaping up for this announcement.
Zacks Model Shows Unlikely Earnings Beat
Our proven model does not conclusively show that Deckers 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. Deckers has an Earnings ESP of -1.46% as the Most Accurate estimate stands at $4.72, while the Zacks Consensus Estimate is pegged at $4.79. Moreover, the company carries a Zacks Rank #4 (Sell).
We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Factors Influencing this Quarter
Although Deckers recorded better-than-expected second-quarter fiscal 2016 bottom-line results, it delivered a subdued gross margin performance. Consequently, its quarterly earnings of $1.11 per share declined 5.1% year over year. While UGG and HOKA ONE ONE brands registered sales growth, softness prevailed across the Teva and Sanuk brands.
Management expects gross margin to remain under pressure during the third quarter as well as fiscal 2016 due to a stronger U.S. dollar. Moreover, analysts covering the stock are not constructive about the company’s performance in the third quarter as evident from the downtrend in the Zacks Consensus Estimate. Over the past 90 days, the Zacks Consensus Estimate for the third quarter has declined 4.4%.
Stocks Poised to Beat Earnings Estimates
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:
Express Inc. EXPR has an Earnings ESP of +1.56% and a Zacks Rank #1 (Strong Buy).
Foot Locker, Inc. FL has an Earnings ESP of +0.89% and a Zacks Rank #2 (Buy).
The Home Depot, Inc. HD has an Earnings ESP of +0.91% and a Zacks Rank #3 (Hold).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment