Factors Likely to Drive Spectrum Brands' (SPB) Earnings in Q3
Spectrum Brands Holdings, Inc. SPB is slated to report third-quarter fiscal 2020 results on Jul 31, before the opening bell. In the last reported quarter, the company delivered an earnings surprise of 175.8%. Moreover, its earnings outperformed the Zacks Consensus Estimate by 36.8%, on average, in the trailing four quarters.
The Zacks Consensus Estimate for fiscal third-quarter earnings has moved down by 3 cents to 96 cents in the past 30 days. Moreover, this suggests a 28.9% decline from the year-ago quarter’s reported figure. Further, the consensus mark for revenues is pegged at $938.1 million, indicating a decline of 8.2% from the figure reported in the year-ago quarter.
Key Factors to Note
Spectrum Brands has been gaining from its Global Productivity Improvement Plan, which is aimed at improving operating efficiency and effectiveness. This coupled with lower expenses and growth in operating income aided top and bottom-line results in the last reported quarter. Gains from this initiative and other operating synergies are expected to get reflected in the company’s to-be-reported quarter results as well.
Spectrum Brands Holdings Inc. Price and EPS Surprise
Further, the addition of Omega Sea to the company’s Global Pet Care portfolio along with the exit of rawhide manufacturing facilities in Cambodia and the European dog and cat food manufacturing operations bodes well for the quarter under review. Cumulatively, Spectrum Brands is expected to have witnessed gains in the pet segment in the fiscal third quarter, backed by its pipeline of robust innovation and the above portfolio-streamlining initiatives.
Additionally, the company’s Home & Personal Care segment is likely to have contributed to sales in the fiscal third quarter, owing to strength in personal care and small appliances business, as well as in almost all regions. Although temporary store closures are expected to have hurt performance, strong sales in mass and online channels are anticipated to have contributed to sales gains in the to-be-reported quarter.
However, the company expects a significant coronavirus outbreak-led impacts in the fiscal third quarter, including supply-chain disruptions at manufacturing facilities across the Philippines, Mexico, the United States and China; significant changes in consumer behavior; and macroeconomic headwinds. Further, sluggishness in the Hardware & Home Improvement segment and currency woes may act as deterrents.
What the Zacks Model Unveils
Our proven model predicts an earnings beat for Spectrum Brands this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Spectrum Brands has a Zacks Rank #3 and an Earnings ESP of +4.85%.
Other Stocks With Favorable Combinations
Here are some other companies you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat:
Reynolds Consumer Products Inc. REYN currently has an Earnings ESP of +1.30% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Funko, Inc. FNKO currently has an Earnings ESP of +10.96% and a Zacks Rank #3.
Hanesbrands Inc. HBI presently has an Earnings ESP of +120.00% and a Zacks Rank #3.
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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.