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Vista Outdoor (VSTO) to Report Q4 Earnings: What's in Store?

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Vista Outdoor Inc. (VSTO - Free Report) is scheduled to report fourth-quarter fiscal 2020 results on May 7. In the last-reported quarter, the company delivered a positive earnings surprise of 61.5%. Moreover, it beat the Zacks Consensus Estimate in two of the trailing four quarters, the average beat being 23.1%.

How Are Estimates Placed?

The Zacks Consensus Estimate for fiscal fourth-quarter earnings is pegged at 7 cents per share, suggesting a significant jump from just a penny reported in the year-ago quarter. For revenues, the consensus mark is pegged at $449.2 million, indicating a decrease of 12.8% from the year-ago figure.

Let's take a look at how things have shaped up in the quarter.

Vista Outdoor Inc. Price and EPS Surprise

 

Factors at Play

Strong demand within the commercial ammunitions, cycling, and outdoor cooking categories are expected to have contributed to revenues. Again, in addition to the various commercial ammo contracts announced in the past year (such as LAPD, NYPD and the Kingdom of Saudi Arabia), the notable increase in demand for products under the company's Outdoor Products segment owing to the "stay at home" trend and inability to travel during the COVID-19 outbreak are anticipated to have provided a boost during the March quarter.

Increased emphasis on product innovation and digital marketing and e-commerce are added positives. The company’s adoption of D-to-C e-commerce channel is likely to have boosted margins in the fiscal fourth quarter. Notably the Zacks Consensus Estimate for Outdoor Products revenues is estimated at $222 million, indicating a rise of 0.9% from the year-ago quarter.

However, the company’s Shooting Sports segment is likely to have witnessed dismal performance owing to persistent softness in the .223/5.56 markets. Notably the Zacks Consensus Estimate for Shooting Sports revenues is at $224 million, indicating a decline of 24.1% from the year-ago quarter.

Overall, relentless focus on cost control, digitalization, marketing initiatives and improvement in customer experience is likely to have benefited the company in the quarter. On the flip side, disruptions in supply chains due to the coronavirus outbreak, tariffs along with factory and retail store closures are likely to get reflected on the fiscal fourth-quarter results.

What Our Model Says

Our proven model does not conclusively predict an earnings beat for Vista Outdoor this time around. A stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to beat estimates. That is not the case here.

Earnings ESP: Vista Outdoor has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Vista Outdoor, which shares space with Clarus Corporation (CLAR - Free Report) , Pool Corporation (POOL - Free Report) and YETI Holdings, Inc. (YETI - Free Report) in the Leisure and Recreation Products industry, currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

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