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3 Apparel Stocks With Potential to Beat on Earnings This Season
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The apparel industry has been witnessing momentum on its brand-enhancement techniques, including innovations, along with efforts to enhance store and digital operations. Initiatives to bolster brands via marketing strategies, licensing deals, buyouts and alliances are likely to have contributed to the industry player’s continued strong performance in the quarter ending September 2023. Product launches are also essential for the industry players’ growth story.
Investments to enhance the in-store experience of customers have been a key growth driver. Consumers’ growing inclination toward online shopping has put e-commerce at the forefront for players in the apparel industry. These efforts are expected to have boosted the top and bottom-line performances of players in this earnings season.
However, recent trends show that apparel companies have been dealing with elevated input cost inflation, which has been weighing on their profits. Higher SG&A expenses due to elevated marketing expenses and increased investments toward enhancing store and digital operations have been resulting in soft operating margins. The persistence of these trends is expected to have impacted the companies’ operating margins and the bottom line in the to-be-reported quarter. Moreover, the impacts of lower demand due to inflation, rising interest rates and reduced discretionary spending are likely to have been significant concerns for the players.
Expectations
The Apparel industry, which is part of the Zacks Consumer Discretionary sector, seems poised for growth in the quarter under review, owing to the aforementioned trends and initiatives of players. Three Apparel industry champions are lined up to report quarterly earnings results this week — Adidas (ADDYY - Free Report) , Ralph Lauren (RL - Free Report) and Under Armour (UAA - Free Report) .
Overall earnings for the Consumer Discretionary sector are projected to witness year-over-year growth of 8.2% on 53.8% higher revenues, per the latest Earnings Analysis.
Earnings ESP is our proprietary methodology for identifying stocks that have high chances of surprising in their upcoming earnings announcement. It shows the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate. Our research shows that for stocks with this combination, the chances of a positive earnings surprise are as high as 70%.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Our Picks
We have identified three apparel stocks, which are poised to trump earnings estimates this season.
Adidas’ third-quarter 2023 performance is likely to have been aided by strong Yeezy sales and improvements in the core business. The company, in its recent preliminary results, outlined that the underlying Adidas business has been witnessing strong gains. Adidas, a leading brand in the sporting goods market, has an Earnings ESP of +64.33% and a Zacks Rank #2 at present.
ADDYY is expected to register bottom-line growth in the to-be-reported quarter. The Zacks Consensus Estimate for ADDYY’s third-quarter earnings is pegged at 52 cents per share, which suggests growth of 205.9% from the year-ago quarter’s reported figure. The consensus mark for earnings has moved up by 300% in the past 30 days. The company delivered an earnings surprise of 44.4%, on average, in the trailing four quarters.
Ralph Lauren is a major designer, marketer and distributor of premium lifestyle products. Brand strength, solid demand, and expansion across all channels and regions are likely to have boosted the company’s top line in second-quarter fiscal 2024. Its strategies of product elevation, acquisition of full-priced consumers, favorable channel and geographic mix, and ramping up of its targeting and personalization efforts, are likely to have supported AUR growth in the fiscal second quarter. RL’s premium pricing strategy has been a key contributor to its growth story.
Ralph Lauren is expected to register top-line growth when it reports second-quarter fiscal 2024 numbers on Nov 8. Currently, it has an Earnings ESP of +1.80% and a Zacks Rank #3. The apparel and lifestyle products company’s earnings outpaced the Zacks Consensus Estimate by 17.3%, on average, in the trailing four quarters. The Zacks Consensus Estimate for RL’s second-quarter fiscal 2024 revenues is pegged at $1.61 billion, which indicates an increase of 1.9% from the year-ago quarter’s reported figure.
Under Armour offers a wide variety of products, including sporting goods and lifestyle products. The company’s second-quarter fiscal 2024 earnings are expected to have benefited from its focus on strengthening brands through enhanced customer connections, effective innovations, better price points and a new loyalty program. UAA’s strategy to focus on improving sales through product innovation, investments in the stores and acceleration of e-commerce capabilities also bodes well.
Under Armour is likely to report year-over-year earnings growth when it reports second-quarter fiscal 2024 results on Nov 8. The company currently has a Zacks Rank #3 and an Earnings ESP of +1.12%. The Zacks Consensus Estimate for UAA’s fiscal second-quarter earnings is pegged at 21 cents per share, which suggests growth of 5% from the year-ago quarter’s reported figure. The consensus mark for earnings has been unchanged in the past 30 days. The company delivered an earnings surprise of 72.4%, on average, in the trailing four quarters.
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3 Apparel Stocks With Potential to Beat on Earnings This Season
The apparel industry has been witnessing momentum on its brand-enhancement techniques, including innovations, along with efforts to enhance store and digital operations. Initiatives to bolster brands via marketing strategies, licensing deals, buyouts and alliances are likely to have contributed to the industry player’s continued strong performance in the quarter ending September 2023. Product launches are also essential for the industry players’ growth story.
Investments to enhance the in-store experience of customers have been a key growth driver. Consumers’ growing inclination toward online shopping has put e-commerce at the forefront for players in the apparel industry. These efforts are expected to have boosted the top and bottom-line performances of players in this earnings season.
However, recent trends show that apparel companies have been dealing with elevated input cost inflation, which has been weighing on their profits. Higher SG&A expenses due to elevated marketing expenses and increased investments toward enhancing store and digital operations have been resulting in soft operating margins. The persistence of these trends is expected to have impacted the companies’ operating margins and the bottom line in the to-be-reported quarter. Moreover, the impacts of lower demand due to inflation, rising interest rates and reduced discretionary spending are likely to have been significant concerns for the players.
Expectations
The Apparel industry, which is part of the Zacks Consumer Discretionary sector, seems poised for growth in the quarter under review, owing to the aforementioned trends and initiatives of players. Three Apparel industry champions are lined up to report quarterly earnings results this week — Adidas (ADDYY - Free Report) , Ralph Lauren (RL - Free Report) and Under Armour (UAA - Free Report) .
Overall earnings for the Consumer Discretionary sector are projected to witness year-over-year growth of 8.2% on 53.8% higher revenues, per the latest Earnings Analysis.
The Winning Strategy
A strategy to arrive at the potential winners is by picking stocks that have the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.
Earnings ESP is our proprietary methodology for identifying stocks that have high chances of surprising in their upcoming earnings announcement. It shows the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate. Our research shows that for stocks with this combination, the chances of a positive earnings surprise are as high as 70%.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Our Picks
We have identified three apparel stocks, which are poised to trump earnings estimates this season.
Adidas’ third-quarter 2023 performance is likely to have been aided by strong Yeezy sales and improvements in the core business. The company, in its recent preliminary results, outlined that the underlying Adidas business has been witnessing strong gains. Adidas, a leading brand in the sporting goods market, has an Earnings ESP of +64.33% and a Zacks Rank #2 at present.
ADDYY is expected to register bottom-line growth in the to-be-reported quarter. The Zacks Consensus Estimate for ADDYY’s third-quarter earnings is pegged at 52 cents per share, which suggests growth of 205.9% from the year-ago quarter’s reported figure. The consensus mark for earnings has moved up by 300% in the past 30 days. The company delivered an earnings surprise of 44.4%, on average, in the trailing four quarters.
Adidas AG Price and EPS Surprise
Adidas AG price-eps-surprise | Adidas AG Quote
Ralph Lauren is a major designer, marketer and distributor of premium lifestyle products. Brand strength, solid demand, and expansion across all channels and regions are likely to have boosted the company’s top line in second-quarter fiscal 2024. Its strategies of product elevation, acquisition of full-priced consumers, favorable channel and geographic mix, and ramping up of its targeting and personalization efforts, are likely to have supported AUR growth in the fiscal second quarter. RL’s premium pricing strategy has been a key contributor to its growth story.
Ralph Lauren is expected to register top-line growth when it reports second-quarter fiscal 2024 numbers on Nov 8. Currently, it has an Earnings ESP of +1.80% and a Zacks Rank #3. The apparel and lifestyle products company’s earnings outpaced the Zacks Consensus Estimate by 17.3%, on average, in the trailing four quarters. The Zacks Consensus Estimate for RL’s second-quarter fiscal 2024 revenues is pegged at $1.61 billion, which indicates an increase of 1.9% from the year-ago quarter’s reported figure.
Ralph Lauren Corporation Price and EPS Surprise
Ralph Lauren Corporation price-eps-surprise | Ralph Lauren Corporation Quote
Under Armour offers a wide variety of products, including sporting goods and lifestyle products. The company’s second-quarter fiscal 2024 earnings are expected to have benefited from its focus on strengthening brands through enhanced customer connections, effective innovations, better price points and a new loyalty program. UAA’s strategy to focus on improving sales through product innovation, investments in the stores and acceleration of e-commerce capabilities also bodes well.
Under Armour is likely to report year-over-year earnings growth when it reports second-quarter fiscal 2024 results on Nov 8. The company currently has a Zacks Rank #3 and an Earnings ESP of +1.12%. The Zacks Consensus Estimate for UAA’s fiscal second-quarter earnings is pegged at 21 cents per share, which suggests growth of 5% from the year-ago quarter’s reported figure. The consensus mark for earnings has been unchanged in the past 30 days. The company delivered an earnings surprise of 72.4%, on average, in the trailing four quarters.
Under Armour, Inc. Price and EPS Surprise
Under Armour, Inc. price-eps-surprise | Under Armour, Inc. Quote