Will Steven Madden (SHOO) Disappoint Earnings Estimates? - Analyst Blog


Steven Madden Ltd.  ( SHOO ) is set to report second-quarter fiscal 2014 results on Jul 31. Last quarter, the shoes and apparel retailer delivered in-line results.

The company reported in-line earnings for three out of the last four quarters. Let's see how things are shaping up for this announcement.

Factors to Consider This Quarter

Steven Madden's top line has been affected by harsh winter conditions and slow store traffic in the past couple of quarters. Moreover, limited new fashion trends at the stores failed to attract shoppers which added to the company's woes. Management expects the tough retail conditions to continue in the second quarter as well.

Further, slow sales in the first few months of the 2014 resulted in piled up inventory in Steven Madden's retail segment. The company will have to clear its stock by offering heavy discounts and through promotional strategies which will put pressure on margins in the coming quarter.

However,  summer is expected to spur the pent-up demand for the company's products. Moreover, Steven Madden revamped its website in Mar 2014. The new site offers a much improved experience on mobile and tablets and innovative social media integration. The initiative is expected to lead to uptick in sales in the to-be reported quarter.

Earnings Whispers?

Our proven model does not conclusively show that Steven Madden is likely to beat earnings this quarter. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 to surpass earnings estimate. However, that is not the case here due to the following factors:

Zacks ESP: ESP for Steven Madden is 0.00%.

Zacks Rank: Steven Madden 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, according to our model, have the right combination of elements to post an earnings beat this quarter:

Treehouse Foods Inc. ( THS ), with an Earnings ESP of +1.21% and a Zacks Rank #1 (Strong Buy).

Colgate-Palmolive Co. ( CL ), with an Earnings ESP of +1.37% and a Zacks Rank #2.

The J. M. Smucker Company ( SJM ), with an Earnings ESP of +1.46% and a Zacks Rank #3 (Hold).

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TREEHOUSE FOODS (THS): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: SHOO , CL , SJM , THS



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