) is scheduled to report third quarter 2013 earnings after the
market closes on Nov 5, 2013. Last quarter, Fossil posted a
positive surprise of 23.6%. Let's see how things are shaping up
for this announcement.
Why a Likely Positive Surprise?
Our proven model shows that Fossil is likely to beat earnings
because it has the right combination of two key ingredients.
Positive Zacks ESP:
, which represents the difference between the Most Accurate
estimate and the Zacks Consensus Estimate, is +1.45%. This is
meaningful and a leading indicator of a likely positive earnings
surprise for the shares.
Zacks Rank #3 (Hold):
Fossil carries a Zacks Rank #3. Note that stocks with a Zacks
Rank #1, #2 and #3 have a significantly higher chance of beating
earnings estimates. The Sell rated stocks (#4 and #5) should
never be considered going into an earnings
The combination of Fossil's Zacks Rank #3 (Hold) and a
positive ESP of +1.45% makes us confident of an earnings beat on
What is Driving the Better-than-Expected
We believe that the company's strong watch sales, prudent
expense management and its ability to generate positive
comparable store sales are expected to drive earnings results in
the third quarter.
Fossil has been witnessing double-digit growth in global watch
sales after the acquisition of the Skagen brand in Apr, 2012.
Following the Skagen launch, the brand boosted the company's
watch sales. In Feb 2013, Fossil launched the long-awaited and
exclusive collection of watches for men and women by designer
Karl Lagerfeld and received good response. During the first
quarter of 2013, the company introduced Fossil Swiss watches in
Asia. Its Emporio Armani Swiss and Tory Burch lines of watches
are slated for a 2014 launch.
Fossil also has a history of delivering positive comparable
store sales driven by continued strengthening of the Fossil
brand. We remain impressed with the performance of the Fossil
brand and continue to expect solid comp growth in the third
For third-quarter 2013, Fossil expects sales to increase
approximately 12.5% to 13.5%. The company expects earnings in the
range of $1.30 to $1.37 per share and operating margin in the
range of 15.0% to 15.5%.
During its second quarter conference call, Fossil also raised
its guidance for earnings, sales and operating margin for full
year 2013. The increased guidance reflects continued momentum of
the Fossil brand and new product launches in 2013.
Other Stocks to Consider
Here are some other companies in the retail sector that can be
considered as our model shows that they have the right
combination of elements to post an earnings beat this
Best Buy Inc.
), with an Earnings ESP of +27.27% and a Zacks Rank #1 (Strong
), with an Earnings ESP of +1.89% and a Zacks Rank #3.
Michael Kors Holding Ltd.
), with an Earnings ESP of +7.46% and a Zacks Rank #3.
BEST BUY (BBY): Free Stock Analysis Report
FOSSIL GRP INC (FOSL): Free Stock Analysis
MICHAEL KORS (KORS): Free Stock Analysis
KROGER CO (KR): Free Stock Analysis Report
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