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What's in Store for Deckers Outdoor (DECK) in Q2 Earnings?

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Deckers Outdoor Corp.DECK , a leading designer, producer, and brand manager of innovative, niche footwear and accessories, is expected to report second-quarter fiscal 2016 results on Oct 22, 2015. Last quarter, the company posted a positive earnings surprise of 5.3%. Let us see how things are developing for this announcement.

Factors Influencing This Quarter

Deckers delivered a weak performance in the last quarter, with the bottom line declining year over year and the top line falling short of the estimates. Higher expenses and sluggish performance across the UGG and Sanuk brands were the main reasons behind this slump.

Moreover, due to high exposure to international markets, Deckers remains prone to currency fluctuations. Therefore, the weakening of foreign currencies against the U.S. dollar may pressure the company's margins.

Further, Deckers now expects earnings in the second-quarter of fiscal 2016 to be approximately $1.05 per share on a reported basis, reflecting a decline of 10.3% year over year. However, the company expects revenues to increase 1% on a reported basis.

Hence, Management's subdued earnings outlook for second-quarter fiscal 2016 compared with the year-ago quarter figure, makes us cautious on the stock performance in the quarter to be reported.

Earnings Whispers

Our proven model does not conclusively show that Deckers is likely to beat 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: ESP for Deckers is 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate are at $1.07.

Zacks Rank: Deckers carries a Zacks Rank #3 (Hold). Though a Zacks Rank #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 an 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:

American Eagle Outfitters, Inc. AEO has an Earnings ESP of +10.00% and a Zacks Rank #2 (Buy).

L Brands, Inc. LB has an Earnings ESP of +2.08% and a Zacks Rank #3.

The Children's Place, Inc. PLCE has an Earnings ESP of +1.54% and a Zacks Rank #3.

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AMER EAGLE OUTF (AEO): Free Stock Analysis Report

DECKERS OUTDOOR (DECK): Free Stock Analysis Report

CHILDRENS PLACE (PLCE): Free Stock Analysis Report

L BRANDS INC (LB): 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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