We expect Kate Spade & Company KATE to beat expectations when it reports third-quarter 2015 results on Nov 5. Let’s see how things are shaping up for this announcement.
Why a Likely Positive Surprise?
Our proven model shows that Kate Spade is likely to beat earnings because it has the right combination of the two key ingredients.
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, stands at +50.00%. A favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive earnings surprise.
Zacks Rank: Kate Spade currently carries a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1, 2 or 3 have a significantly higher chance of beating earnings. Conversely, Sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement.
Kate Spade’s Zacks Rank #3 and positive ESP make us reasonably confident of an earnings beat.
What is Driving the Better-than-Expected Earnings?
Kate Spade remains focused on enhancing its scale and expects to start reaping benefits from all the strategies adopted in 2014. Moving ahead, the company expects its solid brand portfolio, diverse business model and commitment toward enhancing operating margins, to boost profitability. These factors make us optimistic about the upcoming results.
Stocks that Warrant a Look
Here are some other companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
Dean Foods Company DF has an Earnings ESP of +4.00% and a Zacks Rank #3.
Campbell Soup Company CPB has an Earnings ESP of +2.63% and a Zacks Rank #3.
Michael Kors Holdings Limited KORS has an Earnings ESP of +3.37% and a Zacks Rank #3.
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