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Ralph Lauren (RL) Q3 Earnings: Will the Stock Disappoint?

Ralph Lauren CorporationRL is slated to report third-quarter fiscal 2017 results on Feb 2, 2017. Last quarter, the company delivered a positive earnings surprise of 11.8%. In fact, the company has outperformed the Zacks Consensus Estimate by an average of 11.1% over the trailing four quarters. Let's see how things are shaping up for this announcement.

Ralph Lauren Corporation Price and EPS Surprise

Ralph Lauren Corporation Price and EPS Surprise | Ralph Lauren Corporation Quote

Factors Influencing This Quarter

While Ralph Lauren has a strong earnings surprise history, the company provided a soft outlook for the third quarter and fiscal 2017 with its last reported results. Revenue growth for both periods is expected to be impacted by the company's actions to improve the quality of sales, lowered inventory buys, store closures, price management and other initiatives. Also, foreign currency is expected to have an adverse impact on revenues, though by a minimal amount. Further, the company's margins are expected to be hurt by a rise in new store expenses, negative currency impacts, infrastructure investments and fixed expense deleverage.

Together, these factors make us apprehensive about Ralph Lauren's upcoming results. Moreover, the company's stock price movement depicts a bearish picture. Evidently, Ralph Lauren's shares have declined 16.2% in the past one year, underperforming the Zacks Categorized Textile - Apparel Manufacturing industry's drop of 7%. While we commend the company's focus on its Way Forward Plan that is aimed at evolving the company's core business and reviving its operating structure, the aforementioned obstacles remain concerns.

Earnings Whispers

Our proven model does not conclusively show that Ralph Lauren is likely to beat earnings this quarter. This 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. This is not the case here, as you will see below:

Zacks ESP: Ralph Lauren currently has an Earnings ESP of -0.61%. This is because the Most Accurate estimate of $1.64 stands below the Zacks Consensus Estimate of $1.65. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks Rank: Ralph Lauren carries a Zacks Rank #4 (Sell). We caution against Sell-rated stocks (#4 or 5) 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:

Tractor Supply Company TSCO , slated to report earnings on Feb 1, has an Earnings ESP of +1.09% and a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank stocks here .

Michael Kors Holdings Limited KORS , scheduled to report earnings on Feb 7, has an Earnings ESP of +2.45% and a Zacks Rank #2.

Yum! Brands, Inc. YUM , scheduled to report earnings on Feb 8, has an Earnings ESP of +2.82% and a Zacks Rank #3.

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Yum! Brands, Inc. (YUM): Free Stock Analysis Report

Tractor Supply Company (TSCO): Free Stock Analysis Report

Ralph Lauren Corporation (RL): Free Stock Analysis Report

Michael Kors Holdings Limited (KORS): 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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