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Black Diamond (BDE) to Post Q3 Earnings: What's in Store?

Black Diamond, Inc.BDE is set to report third-quarter 2015 results on Nov 9, after the market closes. Last quarter, the company posted a positive earnings surprise of 109.9%. In fact, the company has posted positive earnings surprise in all the trailing four quarters, with an average positive surprise of 403.9%

Let's see how things are shaping up for the upcoming announcement.

Factors at Play

Black Diamond operates as a sporting goods company, and has seen its sales grow consistently over the past few quarters based on sales growth of Black Diamond brand of apparels and the continued rollout of POC's cycling products, including the new spring 2015 "Race Day" line and expanded assortment of eyewear. Further, the company's partnership with popular outdoor sporting goods retailer, REI, has added synergies to its top line. In fact, Black Diamond generated about 11% of revenues from REI in its last quarter.

Black Diamond is committed to innovation and regularly updates the existing products with new technology, such as self-inflating avalanche packs and mountaineering crampons. The company's decision to relocate manufacturing from Asia to the United States would also boost margins in the third quarter and beyond. The company is positioned to profit from the rising popularity of outdoor sports, especially climbing. The demand for outdoor merchandise is forecast to increase based on the growing awareness of health benefits associated with open-air activities which should boost third-quarter results.

Currency exchange, however, continues to be a headwind as the dollar remains strong. Further, higher production costs related to the relocation of its manufacturing unit would hurt margins in the to-be-reported quarter.

Earnings Whispers

Our proven model does not conclusively show that Black Diamond is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP : Black Diamond's Earnings ESP is +0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 12 cents.

Zacks Rank : Black Diamond has a Zacks Rank #3 (Hold). Though Zacks Rank #1, 2 or 3 increases the predictive power, the company's ESP of 0.00% makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Stocks That Warrant a Look

Here are some companies in the broader consumer discretionary sector that investors may consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter:

Smith & Wesson Holding Corporation SWHC has an earnings ESP of +5.00% and a Zacks Rank #3.

Nord Anglia Education, Inc. NORD has an earnings ESP of +4.35% and a Zacks Rank #2.

Vail Resorts Inc. MTN has an earnings ESP of +3.93% and a Zacks Rank #2.

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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

BLACK DIAMOND (BDE): Free Stock Analysis Report

SMITH & WESSON (SWHC): Free Stock Analysis Report

NORD ANGLIA EDU (NORD): Free Stock Analysis Report

VAIL RESORTS (MTN): 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 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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