Estee Lauder Inc.
) is set to report fourth-quarter and full-year fiscal 2014 results
on Aug 15. Last quarter, the company posted a negative surprise of
2%. Let's see how things are shaping up for this announcement.
Factors to Consider This Quarter
Estee Lauder has been posting better-than-expected results for
several quarters backed by organic sales growth, product innovation
and cost savings measures.
Management expects the momentum to continue even in the fourth
quarter and raised its fiscal 2014 earnings per share outlook
during the third-quarter earnings conference call. Estee Lauder
expects earnings within $2.86 to $2.90 up from prior expectations
$2.80 to $2.87.
However, travel retail, which accounts for a significant portion
of Estee Lauder's revenues, suffered a setback during the quarter.
These factors may hamper top-line growth in the fourth quarter,
thus putting earnings under pressure, in our view.
Moreover, macroeconomic issues like the ongoing slowdown in the
Chinese economy and the unfavorable currency translation in
emerging markets may affect the company's international sales.
Our proven model does not conclusively show that Estee Lauder is
likely to beat earnings this quarter. A stock needs to have both a
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 Estee Lauder is 0.00%.
Estee Lauder has a Zacks Rank #3 (Hold) which when combined with a
0.00% ESP makes surprise prediction difficult.
We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated
stocks) going into the earnings announcement, especially when the
company is seeing negative estimate revision momentum.
Other Stocks to Consider
Other stocks in the consumer staples sector that have both a
positive earnings ESP and a favorable Zacks Rank are:
Pinnacle Foods Inc (
), with an Earnings ESP of +3.03% and a Zacks Rank #2
Supervalu Inc (
), with an Earnings ESP of +9.09% and a Zacks Rank #3.
Inventure Foods Inc (
), with an Earnings ESP of +5.56% and a Zacks Rank #3
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SUPERVALU INC (SVU): Free Stock Analysis Report
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