We expect Ralph Lauren Corp. RL to beat expectations when it reports second-quarter fiscal 2016 results, before the market opens, on Nov 5.
Why a Likely Positive Surprise?
Our proven model shows that Ralph Lauren is likely to beat earnings because it has the right combination of two key ingredients.
Zacks ESP: Ralph Lauren currently has an Earnings ESP of +0.58%. This is because the Most Accurate estimate of $1.75 is higher than the Zacks Consensus Estimate of $1.74.
Zacks Rank: Ralph Lauren 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, the Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.
The combination of Ralph Lauren’s Zacks Rank #3 and Earnings ESP of +0.58% make us confident of an earnings beat.
What is driving the Better-than-Expected Results?
Looking at the earnings surprise history, Ralph Lauren’s performance appears to be quite impressive. The company has delivered positive earnings surprises in three of the last four quarters, which adds up to an average beat of 5.3%.
Apart from strong quarterly results, Ralph Lauren's growth story also looks compelling as it commands a stellar portfolio of globally recognized brands and healthy financial status. Further, management remains confident of its future performance, with its key strategies well on track. We believe that the company’s efforts of global brand reorganization, constant infrastructural investments, eCommerce enhancements and improved product pricing, will enable it to deliver future growth and achieve operational efficiency. These factors keep us optimistic about the company’s upcoming quarterly results.
Other 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 this quarter:
Campbell Soup Company CPB has an Earnings ESP of +2.63% and a Zacks Rank #2 (Buy).
Dean Foods Company DF has an Earnings ESP of +4.00% and a Zacks Rank #3.
Kate Spade & Company KATE has an Earnings ESP of +50.00% and a Zacks Rank #3.
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