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Adidas (ADDYY) Gears Up for Q3 Earnings: Is a Beat in Store?

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Adidas AG (ADDYY - Free Report) is slated to release third-quarter 2019 results on Nov 6.

Notably, the company’s earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, the average being nearly 10%. Let’s discuss the factors that are likely to be reflected in the upcoming quarterly release.

Which Way Are Q3 Estimates Headed?

The Zacks Consensus Estimate for third-quarter earnings is pegged at $1.78, suggesting a 5.8% decline from the prior-year quarter’s reported figure. Moreover, the consensus mark has declined 1.1% over the past 30 days.

Adidas AG Price and EPS Surprise

 

Adidas AG Price and EPS Surprise

Adidas AG price-eps-surprise | Adidas AG Quote

For quarterly revenues, the consensus estimate stands at $7,258 million, indicating 3.1% growth from the year-ago quarter’s reported number.

Factors at Play

Strength in the company’s flagship brand along with the focus on its three growth areas, namely, North America, Greater China and e-commerce is likely to get reflected in its third-quarter results. The Adidas brand, particularly in North America, is likely to have continued benefiting from robust performance of Adidas Sport Inspired shoes and growth across most market segments.

Additionally, the company’s constant investments toward enhancing direct-to-consumer (DTC) network, apps and Creator Club loyalty program is likely to get reflected in its performance in the third quarter. All these factors along with Adidas’ constant product launches and strong marketing initiatives are expected to have driven the top line in the quarter to be reported.

However, the aforesaid cost of investments might have adversely impacted the company’s operating income and profitability in the third quarter. Moreover, certain supply-chain constraints, higher air freight charges and adverse pricing mix might have remained deterrents. In addition, a tough macro backdrop, with intense competitive pressure in key markets, might have impacted Adidas’ results in the quarter.

What the Zacks Model Unveils

Our proven model predicts an earnings beat for Adidas this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

The company has an Earnings ESP of +0.14% and a Zacks Rank #3.

Other Stocks With Favorable Combination

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

Activision Blizzard, Inc (ATVI - Free Report) has an Earnings ESP of +24.30%. It currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

lululemon athletica inc (LULU - Free Report) presently has an Earnings ESP of +1.54% and a Zacks Rank #2.

Ralph Lauren Corporation (RL - Free Report) currently has an Earnings ESP of +0.21% and a Zacks Rank #3.

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