Callaway Golf Company
) is set to report second-quarter fiscal 2014 results on Jul 24.
Last quarter, the golf club and ball manufacturer delivered a
positive surprise of 38.6%. Let us see how things are shaping up
for this announcement.
Factors to Be Considered This Quarter
Callaway Golf has been reporting decent earnings results for the
past few quarters backed by its strong product line and several
strategic initiatives to boost its top line.
However, the company has been facing several short-term
challenges for the past few months. Callaway Golf has witnessed
soft sales as the market slowed down during the last few months due
to inclement weather throughout the U.S. Moreover, retailers are
trying to clear the piled up inventory that had resulted due to
soft sales in the previous months. They are trying to do so by
giving high discounts which has led to a difficult pricing and
promotional environment in the industry.
These macroeconomic headwinds have prompted management to
provide a cautious outlook for the second quarter. The company
expects earnings per share growth in the range of breakeven to
slightly profitable during the quarter compared with an earnings
growth of 12% in the prior-year quarter. Sales are expected to
be flat to down 5% year over year during the quarter.
However, management is geared to strengthen its product line by
continuous innovations and marketing initiatives. Moreover,
improved weather is should boost the company's volumes in the
Our proven model does not conclusively show that Callaway Golf
is likely to beat earnings this quarter. A stock needs to have both
and a Zacks Rank #1, 2 or 3 to surpass earnings estimate. However,
that is not the case here due to the following factors:
ESP for Callaway Golf is 0.00%.
Callaway has a Zacks Rank #2 (Buy) which when combined with a 0.00%
ESP makes surprise prediction difficult.
We caution against stocks with Zacks Rank #4 and 5 (Sell-rated
stocks) going into the earnings announcement, especially when the
company is seeing negative estimate revisions momentum.
Other Stocks to Consider
Here are some other companies that investors may want to
consider as our model shows that they have the right combination of
elements to post an earnings beat this quarter:
The J. M. Smucker Company
), with an Earnings ESP of +1.46% and a Zacks Rank #3 (Hold).
Dr Pepper Snapple Group, Inc.
), with an Earnings ESP of +3.30% and a Zacks Rank #3.
The Coca Cola Company
), with an Earnings ESP of +4.76% and a Zacks Rank #3.
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CALLAWAY GOLF (ELY): Free Stock Analysis Report
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