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Factors to Watch Before Helen of Troy's (HELE) Q4 Earnings

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Helen of Troy Limited (HELE - Free Report) is likely to register a top-and-bottom-line decline when it reports fourth-quarter fiscal 2023 earnings on Apr 26. The Zacks Consensus Estimate for revenues is pegged at $456.2 million, suggesting a decrease of 21.6% from the prior-year quarter’s reported figure.

The Zacks Consensus Estimate for the bottom line has remained unchanged in the past 30 days at $1.89 per share. However, the projection indicates a decline of 24.7% from the year-ago quarter’s reported figure.

Helen of Troy has a trailing four-quarter earnings surprise of 13.4%, on average. This consumer product company reported an earnings surprise of 4.2% in the last reported quarter.

We expect fourth-quarter revenues to tumble 22.7% to $450 million and adjusted earnings per share (EPS) to decline 25% to $1.88.

Helen of Troy Limited Price, Consensus and EPS Surprise

Helen of Troy Limited Price, Consensus and EPS Surprise

Helen of Troy Limited price-consensus-eps-surprise-chart | Helen of Troy Limited Quote

Factors to Consider

A tough operating landscape, including inflation, increased interest rates and reduced operating leverage have been downsides. Also, consumption remained low in certain categories in the third quarter of fiscal 2023. The consolidated operating margin declined 0.6 percentage points to 13.8% due to adverse operating leverage, higher outbound freight costs, and greater salary and wage costs, among others.

Management expects the adjusted operating margin to have declined 100-120 basis points in fiscal 2023 due to adverse operating leverage, the net impact of pricing, an adverse product mix in Health & Wellness and the dilutive impact of the Osprey acquisition in Home & Outdoor.     

Although management raised the lower end of its sales and adjusted EPS guidance for fiscal 2023 on its last earnings call, it still suggests a year-over-year decline. Management now anticipates consolidated net sales between $2.025 billion and $2.05 billion, implying a decrease of 8.9%-7.8% and a Core business decline of 7.5%-6.4%.

The company now expects adjusted EPS in the range of $9.20-$9.40. This indicates a consolidated adjusted EPS decline of 25.6-23.9% and a Core adjusted EPS drop of 24.5-22.8%.

However, strength in Leadership Brands has been an upside. To this end, contributions from the acquisitions of Osprey and Curlsmith offered some respite in the third quarter. A focus on Project Pegasus also bodes well.

Project Pegasus includes efforts to optimize HELE’s brand portfolio, streamline and simplify the organization, grow the cost of goods savings projects and improve the efficiency of the supply-chain network. Further, the project aims at streamlining indirect spending and improving cash flow and working capital.

What the Zacks Model Unveils

Our proven model doesn’t conclusively predict an earnings beat for Helen of Troy this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat, which is not the case here.

Helen of Troy has a Zacks Rank #3 and an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks With the Favorable Combination

Here are three companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Mondelez International (MDLZ - Free Report) currently has an Earnings ESP of +1.06% and a Zacks Rank of 3. MDLZ is expected to register a top-line improvement when it reports first-quarter 2023 numbers. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Mondelez’s quarterly revenues is pegged at $8.4 billion, calling for growth of 8.6% from the prior-year quarter’s reported figure. The Zacks Consensus Estimate for the quarterly EPS of 80 cents suggests a decline of 4.8% from the figure reported in the year-ago fiscal quarter. MDLZ has a trailing four-quarter earnings surprise of 7.5%, on average.

Altria Group (MO - Free Report) currently has an Earnings ESP of +1.93% and a Zacks Rank of 3. The company is likely to register an increase in the top and bottom lines when it reports first-quarter 2023 results. The Zacks Consensus Estimate for Altria’s quarterly revenues is pegged at roughly $5 billion, which suggests a rise of 3.6% from the figure reported in the prior-year quarter.

The Zacks Consensus Estimate for MO’s quarterly EPS of $1.19 suggests a 6.3% increase from the year-ago quarter. Altria has a trailing four-quarter earnings surprise of 0.3%, on average.

Sysco Corporation (SYY - Free Report) currently has an Earnings ESP of +3.07% and a Zacks Rank of 3. The company is likely to register a top-and-bottom-line increase when it reports third-quarter fiscal 2023 results. The consensus mark for SYY’s quarterly revenues is pegged at $18.7 billion, which suggests a jump of 10.8% from the figure reported in the prior-year quarter.

The Zacks Consensus Estimate for Sysco’s bottom line has remained unchanged at 92 cents per share in the past 30 days. The consensus estimate indicates a 29.6% improvement from the year-ago quarter’s figure.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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