School Specialty Inc.
), an education company offering supplemental educational products
and equipment in the U.S. and Canada, is set to release its
fourth-quarter 2012 financial results on Thursday, June 14,
The Zacks Consensus Estimate for fourth-quarter 2012 stands at a
loss of $1.00; with the loss estimates ranging between a high of 91
cents and a low of $1.08. The estimate reflects a decline of 9.9%
from a loss of 91 cents reported in the comparable period last
The Zacks Consensus revenue estimate for the quarter is pegged
at $121 million, reflecting a decrease of 5% from $127.4 million
reported in the prior-year period.
Review of the Last Quarter
School Specialty posted better-than-expected third-quarter 2012
results on the back of effective cost management and margin
improvement. However, budgetary constraints and a competitive
pricing environment were headwinds.
The company posted a loss of 86 cents a share during the
quarter, much better than the Zacks Consensus Estimate of a loss of
91 cents and substantially down from a loss of $1.07 incurred in
the year-ago quarter.
Greenville, Wisconsin-based School Specialty's total revenue
decreased 5.1% year over year and 13.9% sequentially to $85.3
million in the third quarter of 2012.
School Specialty reiterated its fiscal 2012 guidance. Management
continues to project loss per share of between 50 cents and 65
cents, revenue of between $730 million and $740 million and free
cash flow in the range of $0 million to $10 million. EBITDA is
projected in the range of $48 million to $52 million.
(Refer the article:
School Specialty Loss Narrows
Zacks Agreement & Magnitude
Out of the two analysts providing estimates for the fourth of
quarter 2012, none revised their estimates in the last 7 or 30
days. Accordingly, the Zacks Consensus Estimate remained unchanged
at a loss of $1.00.
The Outlook Remains Gloomy
The recent economic downturn has resulted in uncertainties
related to state budget funding levels in the school districts,
which has led to a cautious spending approach. A continued softness
in demand still persists for both curriculum-based products and
Many districts opted to defer their purchasing as states delayed
their traditional adoption cycles for a new curriculum, indicating
ambiguity in the marketplace about the school budgets and the
alteration in common-core standards.
After posting an earnings decline of 51% during the second
quarter of 2012, the company incurred a loss of 86 cents a share in
the third quarter.
As a result, the analysts covering the stock remain cautious
about the company's performance going forward.
Zacks Rank Defining Neutral Stance
We think the abovementioned negatives are already priced into
the shares. Therefore, we expect limited downside. As a result of
which, we retain our long term 'Neutral' recommendation on the
Currently, School Specialty, which competes with
Office Depot Inc.
), carries a Zacks #3 Rank that translates into a short-term 'Hold'
rating and correlates with our long-term recommendation.
OFFICE DEPOT (ODP): Free Stock Analysis Report
SCHOOL SPECIALT (SCHS): Free Stock Analysis
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