Deckers Outdoor Corp. DECK, designer, producer and brand manager of innovative, niche footwear and accessories, is expected to report fourth-quarter fiscal 2015 results on Apr 23. In the last quarter, the company had posted a negative earnings surprise of 0.4%. Let’s see how things are shaping up for this announcement.
Factors Influencing this Quarter
Unfavorable currency fluctuations may hurt the company’s results in the quarter to be reported. In the third quarter, a strong U.S. dollar and higher wholesale order cancellations had weighed upon the company’s top-line performance. Management also lowered the fiscal 2015 total revenue and earnings per share growth forecast to 13.5% and 12.6%, respectively, from the previous projections of 15% and 15.8%. Moreover, over-reliance on the UGG brand is a concern for the company. In the event of stagnation or decline of UGG sales, Deckers’ overall results will be adversely affected. This is because the percentage of contribution from the company’s other brands is too small to offset any slowdown in UGG sales.
Earnings Whispers
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. This is not the case here, as you will see below.
Zacks ESP: Deckers has an Earnings ESP of 100.00%. This is because the Most Accurate estimate is a breakeven, while the Zacks Consensus Estimate stands at a loss of 1 cent.
Zacks Rank: Deckers has a Zacks Rank #4 (Sell). 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:
Tyson Foods, Inc. TSN has an Earnings ESP of +1.35% and a Zacks Rank #2 (Buy).
BJ's Restaurants, Inc. BJRI has an Earnings ESP of +7.14% and a Zacks Rank #2.
The New York Times Company NYT has an Earnings ESP of +12.50% and a Zacks Rank #3 (Hold).
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