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Michael Kors (KORS) Q1 Earnings Preview: Let's Take a Look
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Michael Kors Holdings Limited is slated to report first-quarter fiscal 2017 results on Aug 10. The big question facing investors now is, whether the company will be able to post a positive earnings surprise in the quarter to-be-reported.
In the last quarter, the company recorded a positive earnings surprise of 2.1% . Notably, the company surpassed the Zacks Consensus Estimate in all of the last four quarters, with an average beat of 10.1%. Let’s see how things are shaping up for this announcement.
Zacks Model Shows Unlikely Earnings Beat
Our proven model does not conclusively show that Michael Kors 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, 2 or 3 for this to happen. Michael Kors has an Earnings ESP of 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 74 cents. The company carries a Zacks Rank #4 (Sell), which when combined with an ESP of 0.00% makes a surprise prediction difficult.
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.
Michael Kors continues to invest heavily in new store openings, expanding the existing outlets and building its e-commerce infrastructure. As a result, operating costs are expected to rise, which will compress margins going ahead. Moreover, investments across board will lead to about 690–740 basis points (bps) increase in operating expenses as a percentage of total revenue in fiscal 2017.
Michael Kors generates a portion of net sales outside the U.S. Due to exposure to international markets, the company remains prone to currency fluctuations. The weakening of foreign currencies against the U.S. dollar may require the company to either raise prices or contract profit margins in locations outside of the U.S. An increase in price may have an adverse effect on the demand for the products.
Management anticipates first-quarter fiscal 2017 earnings between 70 cents and 74 cents per share in comparisons to 87 cents earned in the prior-year quarter.
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 to post an earnings beat:
Macy's, Inc. (M - Free Report) currently has an Earnings ESP of +25% and a Zacks Rank #2 (Buy).
The Children's Place, Inc. (PLCE - Free Report) currently has an Earnings ESP of +25% and a Zacks Rank #2 (Buy).
The Gap Inc. (GPS - Free Report) currently has an Earnings ESP of +2.13% and a Zacks Rank #3.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
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Michael Kors (KORS) Q1 Earnings Preview: Let's Take a Look
Michael Kors Holdings Limited is slated to report first-quarter fiscal 2017 results on Aug 10. The big question facing investors now is, whether the company will be able to post a positive earnings surprise in the quarter to-be-reported.
In the last quarter, the company recorded a positive earnings surprise of 2.1% . Notably, the company surpassed the Zacks Consensus Estimate in all of the last four quarters, with an average beat of 10.1%. Let’s see how things are shaping up for this announcement.
Zacks Model Shows Unlikely Earnings Beat
Our proven model does not conclusively show that Michael Kors 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, 2 or 3 for this to happen. Michael Kors has an Earnings ESP of 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 74 cents. The company carries a Zacks Rank #4 (Sell), which when combined with an ESP of 0.00% makes a surprise prediction difficult.
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.
MICHAEL KORS Price and EPS Surprise
MICHAEL KORS Price and EPS Surprise | MICHAEL KORS Quote
Factors Influencing this Quarter
Michael Kors continues to invest heavily in new store openings, expanding the existing outlets and building its e-commerce infrastructure. As a result, operating costs are expected to rise, which will compress margins going ahead. Moreover, investments across board will lead to about 690–740 basis points (bps) increase in operating expenses as a percentage of total revenue in fiscal 2017.
Michael Kors generates a portion of net sales outside the U.S. Due to exposure to international markets, the company remains prone to currency fluctuations. The weakening of foreign currencies against the U.S. dollar may require the company to either raise prices or contract profit margins in locations outside of the U.S. An increase in price may have an adverse effect on the demand for the products.
Management anticipates first-quarter fiscal 2017 earnings between 70 cents and 74 cents per share in comparisons to 87 cents earned in the prior-year quarter.
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 to post an earnings beat:
Macy's, Inc. (M - Free Report) currently has an Earnings ESP of +25% and a Zacks Rank #2 (Buy).
The Children's Place, Inc. (PLCE - Free Report) currently has an Earnings ESP of +25% and a Zacks Rank #2 (Buy).
The Gap Inc. (GPS - Free Report) currently has an Earnings ESP of +2.13% and a Zacks Rank #3.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>