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Factors Likely to Shape Castle Brands' (ROX) Earnings in Q1

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Castle Brands Inc. is expected to report first-quarter fiscal 2020 results on Aug 8.

Although the company delivered a positive earnings surprise in the last reported quarter, it lagged the Zacks Consensus Estimate in two of the trailing four quarters.

Let’s see how things are shaping up prior to the upcoming earnings release.

Which Way Are Q1 Estimates Headed?

The Zacks Consensus Estimate for first-quarter fiscal 2020 stands at break-even earnings. Further, the consensus mark remained unchanged over the past 30 days.

Castle Brands, Inc. Price and EPS Surprise

Castle Brands, Inc. Price and EPS Surprise

Castle Brands, Inc. price-eps-surprise | Castle Brands, Inc. Quote

For quarterly revenues, the consensus estimate is pinned at $22.9 million, suggesting a 1% decline from the year-ago reported figure.

Factors at Play

Castle Brands is experiencing strength in its profitable brands, namely Jefferson's, Goslings and Knappogue Irish whiskey. This is likely to continue in the to-be-reported quarter. These brands have been aiding the company’s results, leading to higher revenues. Moreover, the company remains on track with its new fill program to boost its Jefferson's bourbons and Irish whiskey supplies.

Furthermore, management remains optimistic about the Jefferson's bourbon inventories. In fact, the company has been using its aged bourbon reserves to boost Jefferson's sales and its brand extensions like Jefferson's Ocean Aged at Sea, which is gaining traction. These apart, the increasing popularity of ginger beer cocktails is likely to drive growth at Goslings Stormy Ginger Beer and Goslings Black Seal Rum.

However, the company is witnessing higher cost of sales, which might dent its margins and overall profitability. Stiff competition in the industry and other macroeconomic headwinds remain added concerns.

What the Zacks Model Says

Our proven model does not show that Castle Brands is likely to beat earnings estimates in first-quarter fiscal 2020. 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. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Although Castle Brands’ Zacks Rank #2 increases the predictive power of earnings beat, its Earnings ESP of 0.00% makes surprise prediction difficult.

Stocks Poised to Beat Earnings Estimates

Here are some companies that you may want to consider as our model shows that these have the right combination of elements to deliver an earnings beat in the upcoming releases:

Monster Beverage Corporation (MNST - Free Report) has an Earnings ESP of +1.12% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Energizer Holdings, Inc. (ENR - Free Report) has an Earnings ESP of +1.79% and a Zacks Rank #3.

Edgewell Personal Care Company (EPC - Free Report) has an Earnings ESP of +0.35% and a Zacks Rank #3.

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