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Apparel Stocks to Watch for Earnings on Jan 31: UAA, COH

Investors are keeping a close watch on fourth-quarter earnings season, which so far looks steadier compared to the last reported quarters. Per the Earnings Trends report as of Jan 27, out of the 170 S&P 500 members that have come up with their quarterly numbers, approximately 64.1% have posted positive earnings surprises, while 54.7% beat top-line expectations.

According to the report, earnings for the 170 S&P 500 companies that have reported so far have advanced 6% from the same period last year, while revenues have increased 3.1%.

Additionally, the report projects that earnings for the total S&P 500 companies are expected to grow 5.2% from the year-ago period, while revenue will rise 4%. In third-quarter, earnings of S&P 500 companies increased 3.8%, while revenues rose 2.3%.

The performance of the index is not restricted to a single sector, and of the 16 Zacks sectors, five are anticipated to observe an earnings decline in fourth-quarter, with Oil/Energy, Autos and Transportation being a big drag. However, the Consumer Discretionary sector is showing improvement. Total earnings for the Consumer Discretionary sector are estimated to rise by 4%. Further, revenues are projected to increase 13.2%.

Among Consumer Discretionary stocks lined up to report earnings, let's take a sneak peek at two Textile-Apparel companies.

Under Armour, Inc.UAA , the developer, marketer and distributor of branded performance apparel, footwear and accessories, is slated to report fourth-quarter 2016 results on Jan 31, 2017.

Under Armour's sustained focus on brand development, expansion of its DTC business, product innovation and foray into the technology-based fitness business bode well, as evident from its revenue growth of over 20% in the past 26 straight quarters.

Under Armour, Inc. Price, Consensus and EPS Surprise

Under Armour, Inc. Price, Consensus and EPS Surprise | Under Armour, Inc. Quote

However, Under Armour has been grappling with higher interest expense due to higher debt level. In third-quarter 2016, the company's interest expenses increased to nearly $8 million in comparison with $4 million in the prior-year quarter. The company expects interest expenses to rise to roughly $30 million in 2016. We also noted that the company's debt in the third quarter increased to $1.07 billion from $902 million in the year-ago quarter. (Read More: Under Armour: Stock Poised to Beat Earnings in Q4? )

Under Armour carries a Zacks Rank #4 (Sell) and has an Earnings ESP of 4%. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

The Zacks Consensus Estimate for the quarter is pegged at 25 cents. Notably, previously the company carried a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 (Strong Buy) Rank stocks here.

Coach, Inc.COH is scheduled to report second-quarter fiscal 2017 results on Jan 31. A mature domestic market, foreign currency headwinds and cautious consumer spending remain causes of concern. Further, fashion obsolescence remains a primary headwind for the company's business model. Moreover, Coach sells products that are discretionary in nature and consequently, depends upon consumers' disposable income, which is sensitive to macroeconomic factors.Nevertheless, Coach is undergoing a brand transformation and introducing modern luxury concept stores in key markets. The acquisition of Stuart Weitzman has been accretive to its performance and is being viewed as a significant step in its efforts toward becoming a multi-brand company. Moreover, management has undertaken transformation initiatives revolving around product, stores and marketing, which are likely to have a favorable impact in the quarter to be reported. (Read More: Coach Q2 Earnings May Disappoint: Will Stock Suffer? )

Coach, Inc. Price, Consensus and EPS Surprise

Coach, Inc. Price, Consensus and EPS Surprise | Coach, Inc. Quote

Coach currently carries a Zacks Rank #4 and has an Earnings ESP of 1.37%. The Zacks Consensus Estimate for the quarter is pegged at 73 cents, down 1 cent in the past seven days.

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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 Nasdaq, Inc.


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

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