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Columbia Sportswear (COLM) Q4 Earnings: Will Cost Woes Linger?
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Columbia Sportswear Company (COLM - Free Report) is scheduled to report fourth-quarter 2018 results on Feb 7, after market close. This lifestyle apparel, footwear, accessories and equipment company has delivered average positive earnings surprise of 79.9% in the trailing four quarters, with a bottom-line beat in each quarter. Let’s see if the company can maintain its earnings-beat streak this time around.
How Are Estimates Faring?
The Zacks Consensus Estimate for fourth-quarter earnings is pegged at $1.27, reflecting a 3.1% drop from the year-ago quarter. Notably, the consensus mark has remained stable over the past 30 days. For revenues, the consensus estimate stands at $850.3 million, up approximately 10% from the year-ago quarter’s reported figure.
Columbia Sportswear Company Price, Consensus and EPS Surprise
Columbia Sportswear is on track with the Project CONNECT program, which is likely to drive sales and earnings growth alongside strengthening the company’s financial position. The initiative focuses on connecting consumers, wholesale customers and international distributors with manufacturing partners and employees across the globe. Markedly, the program is expected to deliver low-double-digit percentage growth in net income, enhance revenues, capture cost of sales efficiencies, improve gross margins and lower SG&A costs, which bode well for the quarter to be reported.
Further, the company boasts a strong international presence, which provides Columbia Sportswear with a solid business foundation and enables it to seek new opportunities to boost profitability. In fact, the company’s advancement in the EMEA region has been impressive lately, especially owing to the Europe-direct business and greater sales to EMEA distributors. Also, the company is focused on growing its DTC business. Notably, this constituted 40% of Columbia Sportswear’s total revenues in 2017, wherein DTC sales increased at a high-single-digit rate year over year. Encouragingly, management expects DTC revenue increase to outpace growth at wholesale channels in the forthcoming periods.
Meanwhile, management is committed toward driving sales across channels through brand awareness and expansion of digital capabilities. Further, Columbia Sportswear’s brand-enhancing and marketing initiatives have been boosting revenues. Speaking of brands, the company’s prAna and SOREL brands are particularly doing well, backed by constant upgrades and effective management strategies. Together, these upsides paint an impressive picture about Columbia Sportswear’s top line in the quarter to be reported.
Will Cost Hurdles Persist?
Columbia Sportswear is battling higher SG&A expenses. In fact, management expects SG&A costs to continue increasing due to constant investments for capability development as well as informational technology costs associated with the company’s strategic initiatives. Also, the company is exposed to the threats emerging from higher tariffs, thanks to volatilities in trading policies with China. These factors might hurt the company’s bottom line, unless sufficiently compensated by top-line drivers.
What Does the Zacks Model Say?
Our proven model does not conclusively show that Columbia Sportswear is likely to beat estimates during fourth-quarter 2018. 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 can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Here are some other companies you may want to consider as our model shows that these have the right combination of elements to post earnings beat.
Skechers U.S.A., Inc. (SKX - Free Report) has an Earnings ESP of +9.09% and a Zacks Rank #3.
NIKE, Inc. (NKE - Free Report) has an Earnings ESP of +8.37% and a Zacks Rank #3.
Ralph Lauren Corporation (RL - Free Report) has an Earnings ESP of +0.08% and a Zacks Rank #3.
Today's Best Stocks from Zacks
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This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.
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Columbia Sportswear (COLM) Q4 Earnings: Will Cost Woes Linger?
Columbia Sportswear Company (COLM - Free Report) is scheduled to report fourth-quarter 2018 results on Feb 7, after market close. This lifestyle apparel, footwear, accessories and equipment company has delivered average positive earnings surprise of 79.9% in the trailing four quarters, with a bottom-line beat in each quarter. Let’s see if the company can maintain its earnings-beat streak this time around.
How Are Estimates Faring?
The Zacks Consensus Estimate for fourth-quarter earnings is pegged at $1.27, reflecting a 3.1% drop from the year-ago quarter. Notably, the consensus mark has remained stable over the past 30 days. For revenues, the consensus estimate stands at $850.3 million, up approximately 10% from the year-ago quarter’s reported figure.
Columbia Sportswear Company Price, Consensus and EPS Surprise
Columbia Sportswear Company Price, Consensus and EPS Surprise | Columbia Sportswear Company Quote
Factors Likely to Drive Q4 Results
Columbia Sportswear is on track with the Project CONNECT program, which is likely to drive sales and earnings growth alongside strengthening the company’s financial position. The initiative focuses on connecting consumers, wholesale customers and international distributors with manufacturing partners and employees across the globe. Markedly, the program is expected to deliver low-double-digit percentage growth in net income, enhance revenues, capture cost of sales efficiencies, improve gross margins and lower SG&A costs, which bode well for the quarter to be reported.
Further, the company boasts a strong international presence, which provides Columbia Sportswear with a solid business foundation and enables it to seek new opportunities to boost profitability. In fact, the company’s advancement in the EMEA region has been impressive lately, especially owing to the Europe-direct business and greater sales to EMEA distributors. Also, the company is focused on growing its DTC business. Notably, this constituted 40% of Columbia Sportswear’s total revenues in 2017, wherein DTC sales increased at a high-single-digit rate year over year. Encouragingly, management expects DTC revenue increase to outpace growth at wholesale channels in the forthcoming periods.
Meanwhile, management is committed toward driving sales across channels through brand awareness and expansion of digital capabilities. Further, Columbia Sportswear’s brand-enhancing and marketing initiatives have been boosting revenues. Speaking of brands, the company’s prAna and SOREL brands are particularly doing well, backed by constant upgrades and effective management strategies. Together, these upsides paint an impressive picture about Columbia Sportswear’s top line in the quarter to be reported.
Will Cost Hurdles Persist?
Columbia Sportswear is battling higher SG&A expenses. In fact, management expects SG&A costs to continue increasing due to constant investments for capability development as well as informational technology costs associated with the company’s strategic initiatives. Also, the company is exposed to the threats emerging from higher tariffs, thanks to volatilities in trading policies with China. These factors might hurt the company’s bottom line, unless sufficiently compensated by top-line drivers.
What Does the Zacks Model Say?
Our proven model does not conclusively show that Columbia Sportswear is likely to beat estimates during fourth-quarter 2018. 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 can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Columbia Sportswear has an Earnings ESP of 0.00% and a Zacks Rank #3, which makes surprise prediction difficult. You can see the complete list of today’s Zacks #1 Rank stocks here.
Other Stocks With Favorable Combination
Here are some other companies you may want to consider as our model shows that these have the right combination of elements to post earnings beat.
Skechers U.S.A., Inc. (SKX - Free Report) has an Earnings ESP of +9.09% and a Zacks Rank #3.
NIKE, Inc. (NKE - Free Report) has an Earnings ESP of +8.37% and a Zacks Rank #3.
Ralph Lauren Corporation (RL - Free Report) has an Earnings ESP of +0.08% and a Zacks Rank #3.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.
This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.
See their latest picks free >>