Black Diamond, Inc. BDE is set to report second-quarter 2016 results on Aug 1, after the market closes.
Last quarter, this maker of active outdoor performance equipment and apparel, posted a negative earnings surprise of 125.00%. However, Black Diamond has surpassed earnings estimates twice in the trailing four quarters, with an average positive surprise of 25.19%.
Let’s see how things are shaping up for the upcoming announcement.
Factors at Play
Black Diamond is a sporting goods company, which implemented a few strategies like streamlining of manufacturing processes and overhead cost reduction during fourth-quarter 2015. This should boost results in the to-be reported quarter. The North American business, which delivered strong performance in the past quarters on the back of core climb and mountain categories, is likely to maintain the trend in the soon-to-be reported quarter as well.
Though the U.S dollar is weakening, the impact of unfavorable foreign currency translations is still significant. Moreover, a tough retail environment is likely to keep revenues under pressure. The company has been reporting a year-over-year decline in sales and margin, a trend not likely to change in the soon- to-be reported quarter.
Earnings Whispers
Our proven model does not conclusively show that Black Diamond is likely to beat estimates this quarter. This 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. That is not the case here as you will see below.
Zero ESP: Black Diamond’s Earnings ESP is 0.00% as both the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at 1 cent.
Zacks Rank: Though the company’s Zacks Rank #3 increases the predictive power of ESP, we need to have a positive ESP to be confident about an earnings surprise.
Meanwhile, we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Stocks That Warrant a Look
Here are some stocks in the broader consumer discretionary sector that investors may consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Gildan Activewear Inc. GIL with an Earnings ESP of +4.76% and a Zacks Rank #3.
CBS Corp. CBS, with an Earnings ESP of +1.16% and a Zacks Rank #2.
Vista Outdoor Inc. VSTO, with has an Earnings ESP of +2.94% and a Zacks Rank #3.
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