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Is Coach (COH) Likely to Surprise This Earnings Season? - Analyst Blog

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Coach Inc. ( COH ), the designer and marketer of fine accessories and gifts, is slated to report second-quarter fiscal 2015 results on Jan 27. In the last quarter, it posted a positive surprise of 17.8%. Let's see how things are shaping up for this announcement.

Factors Influencing This Quarter

Coach has laid out the blue print for overhauling, which includes product innovation, compelling pricing strategy, new merchandise assortments and a cost-effective global sourcing model. We believe these initiatives would help in driving comparable-store sales and operating margins in the long term.

The company remains optimistic about its dual-gender Legacy lifestyle collection, dedicated men's stores and international growth opportunities to counter the soft consumer scenario.

Moreover, in the trailing three quarters, the company has outperformed the Zacks Consensus Estimate by an average of 11.7%.

However, the company expects sales to decline in the low-double digits on a constant currency basis in fiscal 2015 due to lower promotion and store closure. Also, a mature domestic market and cautious consumer spending environment might hamper its performance in the near term. Therefore, we remain slightly apprehensive about the company's results in the upcoming quarter.

Earnings Whispers?

Our proven model does not conclusively show that Coach is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below:

Zacks ESP: Earnings ESP for Coach is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 65 cents.

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

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

Stocks That Warrant a Look

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Bebe Stores Inc. ( BEBE ) has an Earnings ESP of +50.00% and a Zacks Rank #1 (Strong Buy).

Tractor Supply Co. ( TSCO ) has an Earnings ESP of +2.63% and a Zacks Rank #3.

Deckers Outdoor Corp. ( DECK ) has an Earnings ESP of +1.78% and a Zacks Rank #3.

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COACH INC (COH): Free Stock Analysis Report

TRACTOR SUPPLY (TSCO): Free Stock Analysis Report

DECKERS OUTDOOR (DECK): Free Stock Analysis Report

BEBE STORES INC (BEBE): 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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