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What's in Store for Fossil (FOSL) This Earnings Season?
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Fossil Group Inc. (FOSL - Free Report) is set to report fourth-quarter 2016 results after the market closes on Feb 14. Last quarter, this global consumer fashion accessories maker and distributor posted a positive earnings surprise of 40.0%. In fact, the company has delivered positive surprises in the past four quarters, with an average surprise of 37.8%.
Let’s see how things are shaping up prior to the announcement.
Fossil Group, Inc. Price, Consensus and EPS Surprise
Product innovation and continued momentum at the Fossil brand have been driving the company’s growth. Fossil’s foray and continued expansion into wearable technology enables it to bring smartwatches to its customers, fusing fashion with technology. Despite the competition from traditional watchmakers and soft watch sales of late, connected wearables and smartwatches are expected to bring a unique branded experience to customers, thereby aiding a turnaround in Fossil’s results.
However, during third-quarter 2016, Fossil narrowed its fiscal 2016 outlook due to economic, competitive and consumer headwinds. A decline in the company's multi-brand licensed watch portfolio and a challenging environment for the traditional watch category is hurting the results.
Though Fossil’s connected wearables and smartwatches are expected to drive momentum, the Watches category is likely to remain sluggish due to general weakness. Unfavorable currency translations and sluggish U.S. comps are also hurting growth.
In fact, Fossil’s shares have been underperforming the Zacks categorized Retail-Apparel/Shoe industry over the past one year. The stock declined 28.3% in comparison to the industry’s fall of 10.2%. Notably, the industry is part of the bottom 10% of the Zacks Classified industries (239 out of the 265). Even the broader Retail and Wholesale sector is placed at the bottom most of the Zacks Classified sectors (16 out of 16).
For fourth-quarter fiscal 2016 Fossil expects adjusted earnings in the range of $1.07−$1.57 per share. This excludes 38 cents of charges related to the Misfit acquisition.
The company expects net sales in a range of down 2% to up 4%, bearing a roughly 80 bps negative impact from currency headwind. Operating margin is estimated in a range of 8.5% to 11.0% for the fourth quarter, which excludes 260 bps from Misfit acquisition expenses.
The company expects fourth-quarter gross margins to be down from last year due to higher impact of wearables mix, which currently deliver lower margins than traditional watches.
Earnings Whispers
Our proven model does not conclusively show that Fossil is likely to beat earnings 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.
Zacks ESP: Earnings ESP for Fossil is 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate stands at $1.21 per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Fossil’s Zacks Rank #2 increases the predictive power of ESP. However, the company’s ESP of 0.00% makes surprise prediction difficult.
We caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some consumer staple companies, which are worth considering, as our model shows that they have the right combination of these two elements.
Pinnacle Foods, Inc. has an Earnings ESP of +1.27% and a Zacks Rank #2.
Sanderson Farms, Inc. has an Earnings ESP of +0.78% and a Zacks Rank #3.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017?
Who wouldn't? As of early December, the 2016 Top 10 produced 5 double-digit winners including oil and natural gas giant Pioneer Natural Resources which racked up a stellar +50% gain. The new list is painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. Be among the very first to see it>>
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What's in Store for Fossil (FOSL) This Earnings Season?
Fossil Group Inc. (FOSL - Free Report) is set to report fourth-quarter 2016 results after the market closes on Feb 14. Last quarter, this global consumer fashion accessories maker and distributor posted a positive earnings surprise of 40.0%. In fact, the company has delivered positive surprises in the past four quarters, with an average surprise of 37.8%.
Let’s see how things are shaping up prior to the announcement.
Fossil Group, Inc. Price, Consensus and EPS Surprise
Fossil Group, Inc. Price, Consensus and EPS Surprise | Fossil Group, Inc. Quote
Factors to Consider
Product innovation and continued momentum at the Fossil brand have been driving the company’s growth. Fossil’s foray and continued expansion into wearable technology enables it to bring smartwatches to its customers, fusing fashion with technology. Despite the competition from traditional watchmakers and soft watch sales of late, connected wearables and smartwatches are expected to bring a unique branded experience to customers, thereby aiding a turnaround in Fossil’s results.
However, during third-quarter 2016, Fossil narrowed its fiscal 2016 outlook due to economic, competitive and consumer headwinds. A decline in the company's multi-brand licensed watch portfolio and a challenging environment for the traditional watch category is hurting the results.
Though Fossil’s connected wearables and smartwatches are expected to drive momentum, the Watches category is likely to remain sluggish due to general weakness. Unfavorable currency translations and sluggish U.S. comps are also hurting growth.
In fact, Fossil’s shares have been underperforming the Zacks categorized Retail-Apparel/Shoe industry over the past one year. The stock declined 28.3% in comparison to the industry’s fall of 10.2%. Notably, the industry is part of the bottom 10% of the Zacks Classified industries (239 out of the 265). Even the broader Retail and Wholesale sector is placed at the bottom most of the Zacks Classified sectors (16 out of 16).
For fourth-quarter fiscal 2016 Fossil expects adjusted earnings in the range of $1.07−$1.57 per share. This excludes 38 cents of charges related to the Misfit acquisition.
The company expects net sales in a range of down 2% to up 4%, bearing a roughly 80 bps negative impact from currency headwind. Operating margin is estimated in a range of 8.5% to 11.0% for the fourth quarter, which excludes 260 bps from Misfit acquisition expenses.
The company expects fourth-quarter gross margins to be down from last year due to higher impact of wearables mix, which currently deliver lower margins than traditional watches.
Earnings Whispers
Our proven model does not conclusively show that Fossil is likely to beat earnings 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.
Zacks ESP: Earnings ESP for Fossil is 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate stands at $1.21 per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Fossil’s Zacks Rank #2 increases the predictive power of ESP. However, the company’s ESP of 0.00% makes surprise prediction difficult.
We caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some consumer staple companies, which are worth considering, as our model shows that they have the right combination of these two elements.
ConAgra Foods, Inc. (CAG - Free Report) has an Earnings ESP of +4.55% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Pinnacle Foods, Inc. has an Earnings ESP of +1.27% and a Zacks Rank #2.
Sanderson Farms, Inc. has an Earnings ESP of +0.78% and a Zacks Rank #3.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017?
Who wouldn't? As of early December, the 2016 Top 10 produced 5 double-digit winners including oil and natural gas giant Pioneer Natural Resources which racked up a stellar +50% gain. The new list is painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. Be among the very first to see it>>