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Iconix (ICON) Q4 Earnings: Will the Stock Likely Disappoint?
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Iconix Brand Group, Inc. is set to report fourth-quarter 2016 results on Feb 22. The question lingering in investors’ minds is, whether the company will be able to maintain its positive earnings surprise streak in the to-be-reported quarter. We note that the company has outpaced the Zacks Consensus Estimate in three out of the trailing four quarters, with an average of 39.8%.
Iconix forms part of the Retail-Wholesale sector. Per the latest Zacks Earnings Preview, we note that the above mentioned sector’s earnings growth looks disappointing. Total earnings for the sector are estimated to decline 1.0%, while revenues are projected to improve 4.8%.
Iconix Brand Group, Inc. Price, Consensus and EPS Surprise
Let’s delve deeper how things are shaping up for this announcement.
Which Way are Estimates Treading?
Let’s look at earnings estimate revisions in order to get a clear picture of what analysts are thinking about the company right before the earnings release. The current Zacks Consensus Estimate for the quarter under review has remained unchanged over the past 30 days and is currently pegged at 14 cents, down 42.0% from 25 cents delivered in the year-ago quarter. Analysts polled by Zacks expect revenues of $84.2 million, down 11% from the prior-year period.
What the Zacks Model Unveils?
Our proven model does not conclusively show that Iconix is likely to beat earnings 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.
Iconix has an Earnings ESP of 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 14 cents. Further, the company has a Zacks Rank #5 (Strong Sell). Please note that we caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Factors Influencing the Quarter
Iconix has delivered sluggish results throughout 2015 and in the first nine months of 2016. Further, the company remains skeptical about its full-year performance. Iconix slashed its sales guidance and reiterated its earnings expectation for 2016. The lowered view was due to delayed timing in some new men's programs and difficult macro conditions in Europe.
Shares of this clothing brand licensing company have been underperforming the industry since the past two years due to near-term headwinds. The stock has declined 73.4% in comparison to the Zacks categorized Shoes & Retail Apparel industry over the same time frame, which showcased growth of 13.0%. While the industry is part of the bottom 14% of the Zacks Classified industries (219 out of the 265), the broader Consumer Discretionary sector is also placed at bottom 19% of the Zacks Classified sectors (13 out of 16). The stock also exhibits a VGM Score C.
We note that the company has been witnessing sluggishness in the women's and men's segments in the last seven quarters. Also, it expects other headwinds like higher expenses, higher-than-expected fees from SEC investigation, adjustments related to the financial restatement, and transition costs to hamper its profitability.
Last year, Iconix sold the rights to the Sharper Image brand and related intellectual property assets to ThreeSixty Group, the brand's largest licensee, for $100 million in cash to pay the company’s debt partially, which totaled $1.29 billion as of September end.
The debt-ridden company, at present, is planning a sale of its majority stake in Peanuts Worldwide LLC, which owns the rights to cartoon strip characters Snoopy and Charlie Brown. Besides Peanuts, Iconix is also looking to sell its Strawberry Shortcake brand, which is based on a character that rose to fame in the 1980s as a doll for young girls.
All these factors clearly signal that the company is currently not in good shape and we expect the negative impact of these factors to hurt results of the upcoming quarter.
Stocks to Consider
Here are some companies in the consumer discretionary sector you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
Nike, Inc. (NKE - Free Report) has an Earnings ESP of +3.85% and holds a Zacks Rank #3.
Pinnacle Entertainment, Inc. has an Earnings ESP of +57.14% and holds a Zacks Rank #3.
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Iconix (ICON) Q4 Earnings: Will the Stock Likely Disappoint?
Iconix Brand Group, Inc. is set to report fourth-quarter 2016 results on Feb 22. The question lingering in investors’ minds is, whether the company will be able to maintain its positive earnings surprise streak in the to-be-reported quarter. We note that the company has outpaced the Zacks Consensus Estimate in three out of the trailing four quarters, with an average of 39.8%.
Iconix forms part of the Retail-Wholesale sector. Per the latest Zacks Earnings Preview, we note that the above mentioned sector’s earnings growth looks disappointing. Total earnings for the sector are estimated to decline 1.0%, while revenues are projected to improve 4.8%.
Iconix Brand Group, Inc. Price, Consensus and EPS Surprise
Iconix Brand Group, Inc. Price, Consensus and EPS Surprise | Iconix Brand Group, Inc. Quote
Let’s delve deeper how things are shaping up for this announcement.
Which Way are Estimates Treading?
Let’s look at earnings estimate revisions in order to get a clear picture of what analysts are thinking about the company right before the earnings release. The current Zacks Consensus Estimate for the quarter under review has remained unchanged over the past 30 days and is currently pegged at 14 cents, down 42.0% from 25 cents delivered in the year-ago quarter. Analysts polled by Zacks expect revenues of $84.2 million, down 11% from the prior-year period.
What the Zacks Model Unveils?
Our proven model does not conclusively show that Iconix is likely to beat earnings 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.
Iconix has an Earnings ESP of 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 14 cents. Further, the company has a Zacks Rank #5 (Strong Sell). Please note that we caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Factors Influencing the Quarter
Iconix has delivered sluggish results throughout 2015 and in the first nine months of 2016. Further, the company remains skeptical about its full-year performance. Iconix slashed its sales guidance and reiterated its earnings expectation for 2016. The lowered view was due to delayed timing in some new men's programs and difficult macro conditions in Europe.
Shares of this clothing brand licensing company have been underperforming the industry since the past two years due to near-term headwinds. The stock has declined 73.4% in comparison to the Zacks categorized Shoes & Retail Apparel industry over the same time frame, which showcased growth of 13.0%. While the industry is part of the bottom 14% of the Zacks Classified industries (219 out of the 265), the broader Consumer Discretionary sector is also placed at bottom 19% of the Zacks Classified sectors (13 out of 16). The stock also exhibits a VGM Score C.
We note that the company has been witnessing sluggishness in the women's and men's segments in the last seven quarters. Also, it expects other headwinds like higher expenses, higher-than-expected fees from SEC investigation, adjustments related to the financial restatement, and transition costs to hamper its profitability.
Last year, Iconix sold the rights to the Sharper Image brand and related intellectual property assets to ThreeSixty Group, the brand's largest licensee, for $100 million in cash to pay the company’s debt partially, which totaled $1.29 billion as of September end.
The debt-ridden company, at present, is planning a sale of its majority stake in Peanuts Worldwide LLC, which owns the rights to cartoon strip characters Snoopy and Charlie Brown. Besides Peanuts, Iconix is also looking to sell its Strawberry Shortcake brand, which is based on a character that rose to fame in the 1980s as a doll for young girls.
All these factors clearly signal that the company is currently not in good shape and we expect the negative impact of these factors to hurt results of the upcoming quarter.
Stocks to Consider
Here are some companies in the consumer discretionary sector you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
Extended Stay America, Inc. has an Earnings ESP of +21.43% and carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Nike, Inc. (NKE - Free Report) has an Earnings ESP of +3.85% and holds a Zacks Rank #3.
Pinnacle Entertainment, Inc. has an Earnings ESP of +57.14% and holds a Zacks Rank #3.
Just Released – Driverless Cars: Your Roadmap to Mega-Profits Today
In this latest Special Report, Zacks’ Aggressive Growth Strategist Brian Bolan explores a full-blown technological breakthrough in the making – autonomous cars. He also spotlights 8 stocks with tremendous gain potential to feed off this phenomenon. Click to see the stocks right now >>