Columbia Sportswear Company
) is set to report second-quarter fiscal 2014 results on Jul 24.
Last quarter, the sports apparel retailer delivered a massive
positive surprise of 96.9%.
The company has reported positive earnings surprise for the past
four quarters. Let us see how things are shaping up for this
Factors to be Considered this Quarter
Columbia Sportswear has been reporting decent earnings results
for the past few quarters, backed by strong sales. The company has
also maintained a strong market share position on the back of
strong demand for its Columbia and Sorel brands, especially across
U.S. wholesale and direct-to-consumer channels.
Management is optimistic about the to-be-reported quarter as
well. In-fact, the fiscal 2014 outlook was raised during the
first-quarter conference call. Management expects its full-year
operating income to grow 25% year over year, leading to operating
margin of approximately 8.25%, higher than the prior forecast of
Net sales for 2014 are expected to grow 16% to 18% year over
year, as against the previous expectation of 15% to 17% growth. A
major portion of sales growth is expected to come from the newly
formed China joint venture completed in Jan 2014.
However, the inclement weather that hit the U.S. lingered till
March and resulted in soft sales during the early months of 2014.
Retailers like Columbia Sportswear are thus trying to clear the
resultant piled up inventory by offering heavy discounts which has
led to a difficult pricing and promotional environment in the
industry. This has led to a pricing war among retailers which may
affect Columbia Sportswear's margins and sales during the
Our proven model does not conclusively show that Columbia
Sportswear is likely to beat earnings this quarter. A stock needs
to have both a positive
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 Columbia Sportswear is -5.41%. That is because the Most
Accurate estimate stands at a loss of 39 cents while the Zacks
Consensus Estimate is a loss of 37 cents.
Columbia Sportswear has a Zacks Rank #1 (Strong Buy)
which when combined with a negative ESP makes surprise prediction
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, according to our model, have
the right combination of elements to post an earnings beat this
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.
Keurig Green Mountain Inc.
), with an Earnings ESP of +2.30% and a Zacks Rank #3.
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