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Is Fossil (FOSL) Set to Disappoint this Earnings Season?
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Fossil Group, Inc. (FOSL - Free Report) is slated to report first-quarter 2017 results on May 9, after the closing bell. The question lingering in investors’ minds is, whether this designer and manufacturer of clothing and accessories will be able to post a positive earnings surprise again in the to-be-reported quarter. The company’s earnings have outpaced the Zacks Consensus Estimate in eight straight quarters now, with a trailing four-quarter average of 32.2%.
Let’s delve deeper how things are shaping up for this announcement.
What Does the Zacks Model Unveil?
Our proven model does not show that Fossil is likely to beat estimates this quarter. This is because a stock needs to have both a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP for this to happen. You may uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Fossil Group, Inc. Price, Consensus and EPS Surprise
Fossil has an Earnings ESP of 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at a loss of 21 cents. Moreover, the company has a Zacks Rank #5 (Strong Sell).
Note that 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.
Which Way are Estimates Treading?
Let’s look at the estimate revisions in order to get a clear picture of what analysts are thinking about the company right before earnings release. The Zacks Consensus Estimate for the first quarter and 2017 has been stable over the last 30 days. However, the current Zacks Consensus Estimate of a loss of 21 cents and $1.11 for the first quarter and 2017 are down from the earnings of 20 cents and $2.44 delivered in the year-ago periods, respectively.
Moreover, analysts polled by Zacks expect revenues of $596.5 million for the said quarter, down 9.6% from the year-ago quarter. Also, revenues for 2017 are projected to decline 2.2% to $2.97 billion.
Factors Influencing the Quarter
Fossil is witnessing soft sales in the licensed watch portfolio and sluggish comparable store sales (comps) in the U.S. due to weak traffic. The company is also facing economic challenges in many of its key international markets. In fact, all these factors along with a challenging environment for the traditional watch category and currency fluctuations had hurt the fourth-quarter 2016 sales that missed the Zacks Consensus Estimate and also declined year over year. Notably, the company’s sales have lagged the same in seven of the past nine quarters.
Though the fourth-quarter earnings outpaced the Zacks Consensus Estimate, it fell 23.2% from the prior-year quarter, mainly due to lower sales, gross margin and currency headwinds. Though Fossil’s connected wearables and smartwatches are expected to gain momentum, the Watches category is likely to remain sluggish due to general weakness therein. We note that tech-enabled watches have been significantly affecting traditional watch sales. Increased competition from new entrants in the market and volatility in sales pattern is also affecting the segment. The company continues to expect weakness in this category.
Further, the sales of leathers have persistently been weak as customer response to the assortment continues to put pressure on results. Higher promotional activity, primarily in the outlet stores and higher mix of lower-margin products along with unfavorable currency are also keeping margins under pressure.
We note that shares of Fossil have plunged nearly 56% in the past one year compared with the Zacks categorized Retail – Apparel/Shoe industry’s decline of 10.5%. The industry is currently placed at bottom 2% of the Zacks Classified industries (250 out of 256).
Further, Fossil forms part of the Retail-Wholesale sector that is currently placed at the bottom most of the Zacks Classified sectors (16 out of 16). Per the latest Earnings Outlook, the earnings growth for the sector is estimated to decline 2.2%, despite an expected revenue growth of 3.3% in the first quarter.
Stocks Poised to Beat Earnings Estimates
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:
The Home Depot, Inc. (HD - Free Report) has an Earnings ESP of +0.62% and a Zacks Rank #2.
Lowe's Companies, Inc. (LOW - Free Report) has an Earnings ESP of +2.83% and a Zacks Rank #3.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
Image: Bigstock
Is Fossil (FOSL) Set to Disappoint this Earnings Season?
Fossil Group, Inc. (FOSL - Free Report) is slated to report first-quarter 2017 results on May 9, after the closing bell. The question lingering in investors’ minds is, whether this designer and manufacturer of clothing and accessories will be able to post a positive earnings surprise again in the to-be-reported quarter. The company’s earnings have outpaced the Zacks Consensus Estimate in eight straight quarters now, with a trailing four-quarter average of 32.2%.
Let’s delve deeper how things are shaping up for this announcement.
What Does the Zacks Model Unveil?
Our proven model does not show that Fossil is likely to beat estimates this quarter. This is because a stock needs to have both a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP for this to happen. You may uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Fossil Group, Inc. Price, Consensus and EPS Surprise
Fossil Group, Inc. Price, Consensus and EPS Surprise | Fossil Group, Inc. Quote
Fossil has an Earnings ESP of 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at a loss of 21 cents. Moreover, the company has a Zacks Rank #5 (Strong Sell).
Note that 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.
Which Way are Estimates Treading?
Let’s look at the estimate revisions in order to get a clear picture of what analysts are thinking about the company right before earnings release. The Zacks Consensus Estimate for the first quarter and 2017 has been stable over the last 30 days. However, the current Zacks Consensus Estimate of a loss of 21 cents and $1.11 for the first quarter and 2017 are down from the earnings of 20 cents and $2.44 delivered in the year-ago periods, respectively.
Moreover, analysts polled by Zacks expect revenues of $596.5 million for the said quarter, down 9.6% from the year-ago quarter. Also, revenues for 2017 are projected to decline 2.2% to $2.97 billion.
Factors Influencing the Quarter
Fossil is witnessing soft sales in the licensed watch portfolio and sluggish comparable store sales (comps) in the U.S. due to weak traffic. The company is also facing economic challenges in many of its key international markets. In fact, all these factors along with a challenging environment for the traditional watch category and currency fluctuations had hurt the fourth-quarter 2016 sales that missed the Zacks Consensus Estimate and also declined year over year. Notably, the company’s sales have lagged the same in seven of the past nine quarters.
Though the fourth-quarter earnings outpaced the Zacks Consensus Estimate, it fell 23.2% from the prior-year quarter, mainly due to lower sales, gross margin and currency headwinds. Though Fossil’s connected wearables and smartwatches are expected to gain momentum, the Watches category is likely to remain sluggish due to general weakness therein. We note that tech-enabled watches have been significantly affecting traditional watch sales. Increased competition from new entrants in the market and volatility in sales pattern is also affecting the segment. The company continues to expect weakness in this category.
Further, the sales of leathers have persistently been weak as customer response to the assortment continues to put pressure on results. Higher promotional activity, primarily in the outlet stores and higher mix of lower-margin products along with unfavorable currency are also keeping margins under pressure.
We note that shares of Fossil have plunged nearly 56% in the past one year compared with the Zacks categorized Retail – Apparel/Shoe industry’s decline of 10.5%. The industry is currently placed at bottom 2% of the Zacks Classified industries (250 out of 256).
Further, Fossil forms part of the Retail-Wholesale sector that is currently placed at the bottom most of the Zacks Classified sectors (16 out of 16). Per the latest Earnings Outlook, the earnings growth for the sector is estimated to decline 2.2%, despite an expected revenue growth of 3.3% in the first quarter.
Stocks Poised to Beat Earnings Estimates
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:
Best Buy Co., Inc. (BBY - Free Report) has an Earnings ESP of +12.50% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Home Depot, Inc. (HD - Free Report) has an Earnings ESP of +0.62% and a Zacks Rank #2.
Lowe's Companies, Inc. (LOW - Free Report) has an Earnings ESP of +2.83% and a Zacks Rank #3.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>