Investors are geared up for the Q1 reporting cycle, which is at its nascent stage, with a handful of S&P 500 stocks scheduled to report this week. The overall outlook for this reporting cycle has definitely improved buoyed by expectations of higher earnings as well as revenue growth compared with the prior quarter.
Per our latest Earnings Preview, earnings for the total S&P 500 companies are expected to grow 7.6% from the year-ago period, while revenues will rise 6.3%. In fourth-quarter, earnings of S&P 500 companies increased 7.4%, while revenues rose 4.7%.
The performance of the index is not restricted to a single sector, and of the 16 Zacks sectors, 7 are anticipated to observe an earnings decline in Q3, with Autos, Conglomerates and Transportation being a big drag. As far as consumer discretionary sector is concerned, the total earnings of the sector are anticipated to increase 3.8%, while revenues are estimated to rise 11.3%.
Moreover, we noted that stocks in the Consumer Discretionary sector have been rallying in the past six months. The sector has gained 12.4%, outperforming the S&P 500’s increase of 9.2%.
Among Consumer Discretionary stocks, let’s take a sneak peek at three companies lined up to report on Apr 20.
Skechers U.S.A., Inc. SKX is slated to release first-quarter 2017 results. In the trailing four quarters, it had underperformed the Zacks Consensus Estimate by an average of 14.8%. In the preceding quarter, the company witnessed a negative earnings surprise of 63.6%. Let’s see how things are shaping up prior to this announcement.
With greater emphasis on new line of products, cost containment efforts, inventory management and global distribution platform, Skechers remains well positioned to sustain momentum. The company is also enhancing eCommerce platform. The company currently operates eCommerce sites in Chile, Germany and the U.K. Further, it remained optimistic about performance in first-quarter 2017. Management had earlier highlighted that it expects to deliver flat to slightly positive sales for domestic wholesale business, growth in international business and increase in company-owned retail stores. Further, management had forecast first-quarter net sales in the band of $1.05–$1.075 billion and earnings per share in the range of 50–55 cents. (Read more: Factors That Set the Tone for Skechers Q1 Earnings)
Skechers carries a Zacks Rank #3 (Hold) and has an Earnings ESP of 3.64%. The Zacks Consensus Estimate for the quarter is pegged at 55 cents. Earlier the company had an Earnings ESP of +7.27%. You may uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Pool Corporation POOL, world's largest wholesale distributor of swimming pool supplies, equipment and related products is slated to report first-quarter 2017 earnings. In the previous quarter, the company’s earnings surpassed the Zacks Consensus estimate by 20%. Further, we noted that the company’s earnings have beaten the Zacks Consensus Estimate in the trailing four quarter by an average of 19.9%.
The U.S. housing market seems to have recovered on the back of an improving economic environment, modest wage growth and better employment scenario. Moreover, stronger consumer discretionary spending has fueled an increase in sales of pool construction materials and ancillary equipment, and supplies. This can be attributed to continued investment by consumers in enhancing outdoor living spaces, which along with a tight supply situation, point to consistently robust demand for 2017.
Our proven model shows that Pool Corporation is likely to beat earnings estimates this quarter. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 for this to happen. The Most Accurate estimate is 41 cents while the Zacks Consensus Estimate is pegged at 39 cents. So the ensuing difference, that is, an Earnings ESP of +5.13%, combined with the company’s Zacks Rank #2, makes us reasonably confident of an earnings beat.
Snap-on Incorporated SNA is scheduled to report first-quarter 2017 results, before the opening bell.
Snap-on has an outstanding earnings surprise history – it has not missed estimates in over seven years. Last quarter, it registered a positive earnings surprise of 2.5% and has an average positive surprise of 4% in the trailing four quarters.
Let's see how things are shaping up for this announcement and whether Snap-on is set to add yet another earnings beat to its long-standing winning streak.
Snap-on’s successful earnings streak reflects its consistent capability to leverage on market opportunities for augmenting growth. The company continues to make significant efforts toward improving operating efficiency through the Snap-on Value Creation Processes. For instance, during fourth-quarter 2016, Snap-on’s value creation process contributed to 3.6% organic sales growth, operating margin of 19.8% and an 11.3% increase in earnings per share.
Encouragingly, the company has been witnessing encouraging prospects in most of its business lines that signal brighter days going forward. Additionally, Snap-on’s financial services portfolio has been recording steady growth over the past few years. (Read more: Snap-On to Report Q1 Earnings: A Beat in the Cards?)
Snap-on carries a Zacks Rank #4 (Sell) and has an Earnings ESP of 0.86%. The Zacks Consensus Estimate for the quarter is pegged at $2.34. Notably, previously the company carried a Zacks Rank #3 and Earnings ESP of +1.28%.
Snap-On Incorporated Price, Consensus and EPS Surprise
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