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Here's Why Ralph Lauren (RL) is Poised for Earnings Beat in Q3
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Ralph Lauren Corporation (RL - Free Report) is expected to register top and bottom-line growth when it reports third-quarter fiscal 2022 numbers on Feb 3, before the opening bell. The Zacks Consensus Estimate for revenues is pegged at $1.64 billion, which indicates growth of 14.3% from the year-ago quarter’s reported figure.
The Zacks Consensus Estimate for earnings is pegged at $2.18 per share, which suggests growth of 30.5% from the year-ago quarter’s reported figure. The consensus mark for earnings has been unchanged in the past 30 days.
The apparel and lifestyle products company’s earnings beat the Zacks Consensus Estimate by 31.7% in the last reported quarter. Its earnings outpaced the Zacks Consensus Estimate by 86%, on average, in the trailing four quarters.
Ralph Lauren’s fiscal third-quarter performance is expected to have benefited from sturdy consumer demand for casual bottoms, sweaters and fleece, along with high potential in underdeveloped categories, particularly denim, accessories and home. The company is likely to have retained its strong performance on consistent brand elevation efforts and robust full-priced selling trends, which have been aiding average unit retail (AUR) growth. Robust AUR growth, along with improved pricing and promotions, and better product mix have been boosting the gross margin.
RL’s focus on expanding digital and omni-channel capabilities through investments in the mobile app, omni-channel and fulfillment bodes well. The investments have been accretive to the company’s top line and margins in the past few quarters. The digital business is likely to have continued to be a key growth driver, with accelerated digital sales across all regions in the to-be-reported quarter.
On the last reported quarter’s earnings call, management predicted year over year revenue growth of 14-16% at constant currency for third-quarter fiscal 2022, including a favorable currency impact of 140 basis points. The operating margin is forecast to be 13-13.5%, with a slight expansion in the gross margin. This is mainly due to the shift in the timing of investment from the fiscal second quarter to the third, higher freight costs, normalizing channel mix shift, and foreign-currency headwinds of 30 bps.
Although Ralph Lauren anticipated gross and operating margin growth for the fiscal third quarter, it expects gross margins to be offset by the persistence of certain costs, including global supply-chain pressures, higher freight costs and marketing investments.
On the last reported quarter’s earnings call, the company predicted higher freight costs for the second half of fiscal 2022 and normalizing of the channel mix shift compared with the last year's COVID disruptions. Ralph Lauren also expects the highly volatile and inflationary input cost environment to continue throughout fiscal 2022. The company’s guidance indicates that pressures from higher costs will weigh on third-quarter fiscal 2022 results.
The company also predicted operating expenses to be higher in the second half of fiscal 2022 due to increased marketing and other investments. Higher marketing investments are likely to have stemmed from customer acquisitions and digital brand campaigns in the to-be-reported quarter.
What the Zacks Model Unveils
Our proven model predicts an earnings beat for Ralph Lauren this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Ralph Lauren has a Zacks Rank #3 and an Earnings ESP of +0.86%.
Other Stocks Poised to Beat Earnings Estimates
Here are some more companies you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this reporting cycle.
Skechers (SKX - Free Report) currently has an Earnings ESP of +1.05% and a Zacks Rank of 2. The company is expected to register top and bottom-line growth when it reports the fourth-quarter 2021 numbers. The Zacks Consensus Estimate for SKX’s quarterly revenues is pegged at $1.53 billion, which suggests growth of 15.8% from the prior-year quarter’s reported figure.
The Zacks Consensus Estimate for Skechers’ quarterly earnings has moved up by a penny in the past seven days at 32 cents per share, suggesting 33.3% growth from the year-ago reported number. SKX has delivered an earnings beat of 18.7%, on average, in the trailing four quarters.
Hasbro (HAS - Free Report) currently has an Earnings ESP of +2.50% and a Zacks Rank #2. HAS is likely to register top-line growth when it reports the fourth-quarter 2021 numbers. The Zacks Consensus Estimate for its quarterly revenues is pegged at $1.9 billion, which suggests growth of 8.1% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for Hasbro’s quarterly earnings has moved up 2.4% in the past seven days to 87 cents per share. However, the consensus estimate suggests a decline of 31.5%% from the year-ago quarter’s reported number. HAS has delivered an earnings beat of 47.7%, on average, in the trailing four quarters.
Gildan Activewear (GIL - Free Report) currently has an Earnings ESP of +9.57% and a Zacks Rank #2. GIL is anticipated to register top and bottom-line growth when it reports the fourth-quarter 2021 results. The Zacks Consensus Estimate for Gildan Activewear’s quarterly revenues is pegged at $731 million, indicating an improvement of 5.9% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for Gildan Activewear’s bottom line has moved up 3.6% in the past 30 days to 58 cents per share. The consensus estimate suggests growth of 28.9% from the prior-year quarter. GIL has delivered an earnings beat of 84.9%, on average, in the trailing four quarters.
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Here's Why Ralph Lauren (RL) is Poised for Earnings Beat in Q3
Ralph Lauren Corporation (RL - Free Report) is expected to register top and bottom-line growth when it reports third-quarter fiscal 2022 numbers on Feb 3, before the opening bell. The Zacks Consensus Estimate for revenues is pegged at $1.64 billion, which indicates growth of 14.3% from the year-ago quarter’s reported figure.
The Zacks Consensus Estimate for earnings is pegged at $2.18 per share, which suggests growth of 30.5% from the year-ago quarter’s reported figure. The consensus mark for earnings has been unchanged in the past 30 days.
The apparel and lifestyle products company’s earnings beat the Zacks Consensus Estimate by 31.7% in the last reported quarter. Its earnings outpaced the Zacks Consensus Estimate by 86%, on average, in the trailing four quarters.
Ralph Lauren Corporation Price and EPS Surprise
Ralph Lauren Corporation price-eps-surprise | Ralph Lauren Corporation Quote
Factors to Note
Ralph Lauren’s fiscal third-quarter performance is expected to have benefited from sturdy consumer demand for casual bottoms, sweaters and fleece, along with high potential in underdeveloped categories, particularly denim, accessories and home. The company is likely to have retained its strong performance on consistent brand elevation efforts and robust full-priced selling trends, which have been aiding average unit retail (AUR) growth. Robust AUR growth, along with improved pricing and promotions, and better product mix have been boosting the gross margin.
RL’s focus on expanding digital and omni-channel capabilities through investments in the mobile app, omni-channel and fulfillment bodes well. The investments have been accretive to the company’s top line and margins in the past few quarters. The digital business is likely to have continued to be a key growth driver, with accelerated digital sales across all regions in the to-be-reported quarter.
On the last reported quarter’s earnings call, management predicted year over year revenue growth of 14-16% at constant currency for third-quarter fiscal 2022, including a favorable currency impact of 140 basis points. The operating margin is forecast to be 13-13.5%, with a slight expansion in the gross margin. This is mainly due to the shift in the timing of investment from the fiscal second quarter to the third, higher freight costs, normalizing channel mix shift, and foreign-currency headwinds of 30 bps.
Although Ralph Lauren anticipated gross and operating margin growth for the fiscal third quarter, it expects gross margins to be offset by the persistence of certain costs, including global supply-chain pressures, higher freight costs and marketing investments.
On the last reported quarter’s earnings call, the company predicted higher freight costs for the second half of fiscal 2022 and normalizing of the channel mix shift compared with the last year's COVID disruptions. Ralph Lauren also expects the highly volatile and inflationary input cost environment to continue throughout fiscal 2022. The company’s guidance indicates that pressures from higher costs will weigh on third-quarter fiscal 2022 results.
The company also predicted operating expenses to be higher in the second half of fiscal 2022 due to increased marketing and other investments. Higher marketing investments are likely to have stemmed from customer acquisitions and digital brand campaigns in the to-be-reported quarter.
What the Zacks Model Unveils
Our proven model predicts an earnings beat for Ralph Lauren this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Ralph Lauren has a Zacks Rank #3 and an Earnings ESP of +0.86%.
Other Stocks Poised to Beat Earnings Estimates
Here are some more companies you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this reporting cycle.
Skechers (SKX - Free Report) currently has an Earnings ESP of +1.05% and a Zacks Rank of 2. The company is expected to register top and bottom-line growth when it reports the fourth-quarter 2021 numbers. The Zacks Consensus Estimate for SKX’s quarterly revenues is pegged at $1.53 billion, which suggests growth of 15.8% from the prior-year quarter’s reported figure.
You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Skechers’ quarterly earnings has moved up by a penny in the past seven days at 32 cents per share, suggesting 33.3% growth from the year-ago reported number. SKX has delivered an earnings beat of 18.7%, on average, in the trailing four quarters.
Hasbro (HAS - Free Report) currently has an Earnings ESP of +2.50% and a Zacks Rank #2. HAS is likely to register top-line growth when it reports the fourth-quarter 2021 numbers. The Zacks Consensus Estimate for its quarterly revenues is pegged at $1.9 billion, which suggests growth of 8.1% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for Hasbro’s quarterly earnings has moved up 2.4% in the past seven days to 87 cents per share. However, the consensus estimate suggests a decline of 31.5%% from the year-ago quarter’s reported number. HAS has delivered an earnings beat of 47.7%, on average, in the trailing four quarters.
Gildan Activewear (GIL - Free Report) currently has an Earnings ESP of +9.57% and a Zacks Rank #2. GIL is anticipated to register top and bottom-line growth when it reports the fourth-quarter 2021 results. The Zacks Consensus Estimate for Gildan Activewear’s quarterly revenues is pegged at $731 million, indicating an improvement of 5.9% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for Gildan Activewear’s bottom line has moved up 3.6% in the past 30 days to 58 cents per share. The consensus estimate suggests growth of 28.9% from the prior-year quarter. GIL has delivered an earnings beat of 84.9%, on average, in the trailing four quarters.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.