Ralph Lauren Corporation RL is scheduled to release third-quarter fiscal 2016 results on Feb 4. In the previous quarter, this premium lifestyle merchandise retailer reported a positive earnings surprise of 7.5%. Let’s see how things are shaping up for this announcement.
Factors Affecting This Quarter
Going by the earnings surprise history, Ralph Lauren’s performance has been quite impressive. The company has delivered positive earnings surprises in three of the last four quarters, which add up to an average beat of 4.7%.
Apart from strong quarterly results, Ralph Lauren's growth story looks compelling as it possesses a strong portfolio of globally recognized brands and a healthy financial status. This, along with constant initiatives focused on profitable areas, should boost further growth.
However, the company’s sales guidance in the range of flat to up 2% year-over-year growth for third-quarter fiscal 2016 is not up to the mark. This reflects currency translation impacts of nearly 250 basis points (bps). Also, the company’s operating margin is expected to contract 200–250 bps from the year-ago level. This tones down our expectation for the upcoming quarter.
Earnings Whispers
Our proven model does not conclusively show that Ralph Lauren is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here as you will see below.
Zacks ESP: Ralph Lauren currently has an Earnings ESP of 0.47%. This is because the Most Accurate estimate of $2.12 stands above the Zacks Consensus Estimate of $2.11 per share.
Zacks Rank: Ralph Lauren carries a Zacks Rank #4 (Sell). We caution against Sell-rated stocks (Zacks Rank #4 and 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
Lowe’s Companies Inc. LOW has an Earnings ESP of +6.78% and a Zacks Rank #2.
Home Depot Inc. HD has an Earnings ESP of +0.91% and a Zacks Rank #3.
Dean Foods Company DF has an Earnings ESP of +5.88% and a Zacks Rank #3.
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