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Can Adidas (ADDYY) Q2 Earnings Keep its Solid Streak Alive?
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We expect the renowned sporting goods giant, Adidas AG (ADDYY - Free Report) to release second-quarter 2016 results on Aug 4. Last quarter, the company had delivered a positive earnings surprise of 21.1%. In fact, the bottom line has outperformed the Zacks Consensus Estimate by an average of 15.8% over the trailing four quarters. Let’s see how things are shaping up for this announcement.
Adidas’ progress on its long-term strategic plan – “Creating the New” helped it deliver robust results in the last quarter, thus starting the year on a splendid note. Per management, with its strategic plans and new operating model underway, it is likely to enhance consumer experience and drive results. Also, it remains confident of its product and marketing initiatives across all regions and categories. Moreover, the company’s focus on the North American market is paying off, as this region, along with other core regions, saw solid double-digit revenue growth in the preceding quarter. All these factors also encouraged management to raise its outlook for 2016, further reflecting the company’s confidence in its future performance.
While these factors make us hopeful of Adidas’ upcoming results, foreign currency headwinds and increasing labor costs pose concerns, as these may dent the company’s gross margin, thus impacting overall results. Hence, we would like to wait and see if the company’s growth plans can help keep its positive streak alive.
Earnings Whispers
Our proven model does not conclusively show that Adidas 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. This is not the case here, as you will see below:
Zacks ESP: Earnings ESP for Adidas is currently pegged at 0.00%. This is because the Most Accurate estimate and the Zacks Consensus Estimate are both pegged at 43 cents.
Zacks Rank: Adidas’ Zacks Rank #1 (Strong Buy) increases the predictive power of ESP. However, the company’s ESP of 0.00% makes 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.
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:
L Brands, Inc. , scheduled to report earnings on Aug 17, currently has an Earnings ESP of +8.93% and a Zacks Rank #3 (Hold).
The Gap Inc. (GPS - Free Report) , slated to report earnings on Aug 18, currently has an Earnings ESP of +2.13% and a Zacks Rank #3.
Hibbett Sports, Inc. (HIBB - Free Report) , expected to report earnings on Aug 19, currently has an Earnings ESP of +3.70% and a Zacks Rank #3.
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Can Adidas (ADDYY) Q2 Earnings Keep its Solid Streak Alive?
We expect the renowned sporting goods giant, Adidas AG (ADDYY - Free Report) to release second-quarter 2016 results on Aug 4. Last quarter, the company had delivered a positive earnings surprise of 21.1%. In fact, the bottom line has outperformed the Zacks Consensus Estimate by an average of 15.8% over the trailing four quarters. Let’s see how things are shaping up for this announcement.
ADIDAS AG-ADR Price and EPS Surprise
ADIDAS AG-ADR Price and EPS Surprise | ADIDAS AG-ADR Quote
Factors Influencing this Quarter
Adidas’ progress on its long-term strategic plan – “Creating the New” helped it deliver robust results in the last quarter, thus starting the year on a splendid note. Per management, with its strategic plans and new operating model underway, it is likely to enhance consumer experience and drive results. Also, it remains confident of its product and marketing initiatives across all regions and categories. Moreover, the company’s focus on the North American market is paying off, as this region, along with other core regions, saw solid double-digit revenue growth in the preceding quarter. All these factors also encouraged management to raise its outlook for 2016, further reflecting the company’s confidence in its future performance.
While these factors make us hopeful of Adidas’ upcoming results, foreign currency headwinds and increasing labor costs pose concerns, as these may dent the company’s gross margin, thus impacting overall results. Hence, we would like to wait and see if the company’s growth plans can help keep its positive streak alive.
Earnings Whispers
Our proven model does not conclusively show that Adidas 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. This is not the case here, as you will see below:
Zacks ESP: Earnings ESP for Adidas is currently pegged at 0.00%. This is because the Most Accurate estimate and the Zacks Consensus Estimate are both pegged at 43 cents.
Zacks Rank: Adidas’ Zacks Rank #1 (Strong Buy) increases the predictive power of ESP. However, the company’s ESP of 0.00% makes 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.
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:
L Brands, Inc. , scheduled to report earnings on Aug 17, currently has an Earnings ESP of +8.93% and a Zacks Rank #3 (Hold).
The Gap Inc. (GPS - Free Report) , slated to report earnings on Aug 18, currently has an Earnings ESP of +2.13% and a Zacks Rank #3.
Hibbett Sports, Inc. (HIBB - Free Report) , expected to report earnings on Aug 19, currently has an Earnings ESP of +3.70% 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 >>