Wolverine World Wide Inc. (WWW), one of the leading footwear brands, is set to report its third-quarter fiscal 2014 results on Oct 14. Last quarter, it posted a positive earnings surprise of 14.8%. Let us see how things are developing prior to this announcement.
Factors Affecting the Quarter
Revenues of the Sperry and Merrell brands are likely to remain under pressure, which along with foreign exchange fluctuations might prove to be drags on this quarter’s performance. Moreover, international expansion of PLG products generated a somewhat lukewarm response. All these factors will probably affect management’s goal of earning $4.1 billion in revenues by 2018.
Earnings Whispers
Our proven model does not conclusively project Wolverine as likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #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: ESP for Wolverine is 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate stand at 59 cents.
Zacks Rank: Wolverine’s Zacks Rank #4 (Sell) decreases the predictive power of ESP. Also, 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 an earnings announcement, especially when the company is witnessing negative estimate revisions.
Other Stocks to Consider
Here are some other companies you may want to consider as our model shows these to have the right combination of elements to post an earnings beat:
Chipotle Mexican Grill, Inc. (CMG) with an Earnings ESP of +1.30% holds a Zacks Rank #1.
Under Armour, Inc. (UA) with an Earnings ESP of +2.50% holds a Zacks Rank #2.
V.F. Corporation (VFC) has an Earnings ESP of +0.92% and a Zacks Rank #2.
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