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Steven Madden (SHOO) Q4 Earnings Likely to Improve: Here's Why

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Steven Madden, Ltd. (SHOO - Free Report) is likely to register a substantial improvement in the bottom line when this designer, marketer and seller of footwear and fashion accessories reports fourth-quarter 2018 numbers. Notably, this New York-based company had reported higher earnings in the preceding three quarters and also comfortably surpassed the Zacks Consensus Estimate.

In the trailing four quarters, the company has outperformed the Zacks Consensus Estimate by average of 5%. In the last reported quarter, the company delivered positive earnings surprise of 6.6%.

Drawing focus back on the to-be-reported quarter, the Zacks Consensus Estimate for earnings is currently pegged at 38 cents, reflecting year-over-year increase of roughly 19% from year-ago quarter’s figure of 32 cents. We note that the Zacks Consensus Estimate has remained stable in the last 30 days. The Zacks Consensus Estimate for revenues is pegged at $400.6 million, up about 10% from the year-ago quarter. We note that both the top and bottom line had increased 3.9% and 27.5% in the last reported quarter.

Factors Holding Key to Steven Madden’s Performance

Steven Madden is leaving no stone unturned to boost the top and bottom line. Notably, the company is focusing on enhancing product portfolio. It is also taking several initiatives to expand globally. The company witnessed revenue growth of 24% internationally in the third quarter. The company’s directly-owned subsidiaries in Canada and Mexico, SM Europe JV, and the distributor business reported strong results.

Further, Steven Madden expects its international business to sustain momentum on strategic investments. The company is optimistic about growth in the Middle East, Italy and India. The company anticipates Asia to be a major contributor to net sales. The company also continues to witness robust growth in the Wholesale Footwear and Accessories segments.

The company is witnessing solid trends at the Steve Madden handbag and special make up businesses. Analysts expect the wholesale accessories business to sustain momentum, backed by strength in Steve Madden and private label handbag businesses, and addition of Anne Klein handbags.

However, Steven Madden is witnessing a rise in cost of goods sold and operating expenses that may weigh on margins. Additionally, the imposition of tariffs on additional consumer goods such as shoes, handbags and others imported from China, owing to US-China trade war may hurt business prospects of Steven Madden. Nonetheless, to lower its dependency on China, the company is contemplating shifting most of its handbag production to Cambodia.

Steven Madden, Ltd. Price, Consensus and EPS Surprise


 

Steven Madden, Ltd. Price, Consensus and EPS Surprise | Steven Madden, Ltd. Quote

What the Zacks Model Unveils?

Our proven model shows that Steven Madden is likely to beat estimates this quarter. 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.

Steven Madden has a Zacks Rank #2 and an Earnings ESP of +3.09%. This makes us reasonably confident that it is likely to outperform estimates.

3 Other Stocks With Favorable Combination

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

Zumiez (ZUMZ - Free Report) has an Earnings ESP of +0.45% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Foot Locker (FL - Free Report) has an Earnings ESP of +2.78% and a Zacks Rank #2.

Abercrombie & Fitch (ANF - Free Report) has an Earnings ESP of +0.94% and a Zacks Rank #2.

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