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Black Diamond (BDE) Q3 Earnings Preview: A Hit or Miss?
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Black Diamond, Inc. is set to report third-quarter 2016 results on Oct 31, after the market closes.
Last quarter, this manufacturer and distributor of outdoor recreation equipment and active lifestyle products, posted a negative earnings surprise of 500.00%. Moreover, the trailing four-quarter average earnings surprise stands at a negative 127.08%.
Let’s see how things are shaping up for the upcoming announcement.
Factors at Play
Black Diamond is a sporting goods company, which follows strategies like streamlining of manufacturing processes and overhead cost reduction. These should boost results in the quarter’s performance. Meanwhile, the North American business has been delivering strong performance in the past quarters on the back of core climb and mountain categories. We expect the trend to continue in the third quarter as well.
Moreover, Black Diamond’s independent global distributor business is likely to experience growth, as markets like Japan and Korea have begun to replenish their inventory following a period of industry consolidation and other market headwinds.
However, despite the slight weakening of the U.S. dollar in 2016 from the previous year, the negative currency impact is still significant and is expected to mar the company’s results. Moreover, a tough retail environment is likely to keep revenues under pressure. Further, the company has been reporting a year-over-year decline in sales and gross margin, a trend not likely to change in the to-be-reported quarter
In addition, the manufacturing activities that Black Diamond has been repatriating from China to the U.S. could continue to operate at higher costs, further impacting gross margin.
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. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
Earnings ESP: Black Diamond’s Earnings ESP is 0.00% as both the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at break-even.
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) 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:
Boyd Gaming Corporation (BYD - Free Report) has an Earnings ESP of +16.67% and a Zacks Rank #2.
Carmike Cinemas, Inc. has an Earnings ESP of +166.67% and a Zacks Rank #3.
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Black Diamond (BDE) Q3 Earnings Preview: A Hit or Miss?
Black Diamond, Inc. is set to report third-quarter 2016 results on Oct 31, after the market closes.
Last quarter, this manufacturer and distributor of outdoor recreation equipment and active lifestyle products, posted a negative earnings surprise of 500.00%. Moreover, the trailing four-quarter average earnings surprise stands at a negative 127.08%.
Let’s see how things are shaping up for the upcoming announcement.
Factors at Play
Black Diamond is a sporting goods company, which follows strategies like streamlining of manufacturing processes and overhead cost reduction. These should boost results in the quarter’s performance. Meanwhile, the North American business has been delivering strong performance in the past quarters on the back of core climb and mountain categories. We expect the trend to continue in the third quarter as well.
Moreover, Black Diamond’s independent global distributor business is likely to experience growth, as markets like Japan and Korea have begun to replenish their inventory following a period of industry consolidation and other market headwinds.
However, despite the slight weakening of the U.S. dollar in 2016 from the previous year, the negative currency impact is still significant and is expected to mar the company’s results. Moreover, a tough retail environment is likely to keep revenues under pressure. Further, the company has been reporting a year-over-year decline in sales and gross margin, a trend not likely to change in the to-be-reported quarter
In addition, the manufacturing activities that Black Diamond has been repatriating from China to the U.S. could continue to operate at higher costs, further impacting gross margin.
BLACK DIAMOND Price and EPS Surprise
BLACK DIAMOND Price and EPS Surprise | BLACK DIAMOND Quote
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. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
Earnings ESP: Black Diamond’s Earnings ESP is 0.00% as both the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at break-even.
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) 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:
Boyd Gaming Corporation (BYD - Free Report) has an Earnings ESP of +16.67% and a Zacks Rank #2.
Nexstar Broadcasting Group, Inc. (NXST - Free Report) has an Earnings ESP of +12.64% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Carmike Cinemas, Inc. has an Earnings ESP of +166.67% and a Zacks Rank #3.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>