Skechers USA Inc. SKX, the designer, developer and marketer of footwear, is slated to report third-quarter 2016 results on Oct 20. The question lingering in investors’ minds is, whether the company will be able to deliver a positive earnings surprise in the quarter to be reported. In the trailing four quarters, the company outperformed the Zacks Consensus Estimate by an average of 5.1%. However, in the previous quarter, it missed the Zacks Consensus Estimate by 5.9%. Let’s see how things are shaping up prior to this announcement.
Zacks Model Shows Unlikely Earnings Beat
Our proven model does not conclusively show that Skechers 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 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Skechers has an Earnings ESP of 0.00% as the Most Accurate estimate and the Zacks Consensus Estimate both stand at 46 cents. Moreover, the company carries a Zacks Rank #5 (Strong Sell). 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.
Factors Influencing this Quarter
A tough domestic retail environment, including stiff competition with respect to price and new fashion along with foreign currency headwinds are causes of worry for Skechers. The company will take time to adjust its inventory for the same. Fashion obsolescence remains the primary concern for Skechers' business model, which involves a sustained focus on product and design innovation. Additionally, its pioneering position may be hurt by delays in its product launches.
Stocks Poised to Beat Earnings Estimates
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:
Amazon.com, Inc. AMZN has an Earnings ESP of +6.98% and sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Big 5 Sporting Goods Corp. BGFV has an Earnings ESP of +3.33% and also carries a Zacks Rank #1.
Mattel, Inc. MAT has an Earnings ESP of +1.43% and flaunts a Zacks Rank #1.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>
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
To read this article on Zacks.com click here.
Zacks Investment Research