On Jan 4, 2014, Zacks Investment Research downgraded
Sally Beauty Holdings Inc.
) to a Zacks Rank #5 (Strong Sell).
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SALLY BEAUTY CO (SBH): Free Stock Analysis
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Why the Downgrade?
Sally Beauty has witnessed sharp downward estimate revisions over
the last 60 days. The primary reason behind this was the
company's lackluster performance in the past few quarters. This
specialty retailer and distributor of professional beauty
supplies delivered negative earnings surprises in the last four
quarters with an average miss of 4.6%.
After a decent earnings surprise trend in the last few years,
Sally Beauty missed the Zacks Consensus Estimate four consecutive
times. A fall in domestic retail traffic and the failure to
repeat the success of 2012 led to comparatively muted quarterly
performances in the recent past.
On Nov 18, Sally Beauty posted fourth-quarter fiscal 2013
earnings per share of 38 cents that missed the Zacks Consensus
Estimate by a penny. Moreover, net sales of $906.4 million
increased year over year but fell short of the Consensus
Sally Beauty provided sales guidance for fiscal 2014 with same
store sales growth in the range of 1% to 3%. The company is
anticipating a gradual but definite sales improvement in the
domestic retail business due to the initiatives undertaken by it
to counter the softness.
However, analysts are somewhat apprehensive, as reflected by the
downward estimate revision. For 2014, the Zacks Consensus
Estimate decreased 4.6% to $1.66 per share while for 2015, it
fell 4.5% to $1.90 per share over the last 60 days.
Other Stocks to Consider
Not all retail stocks are performing as poorly as Sally Beauty.
Barnes & Noble, Inc.
Big 5 Sporting Goods Corp.
) are more favorably positioned with a Zacks Rank #2 (Buy).