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Companhia Brasileira (CBD) Q3 Earnings: Assai a Key Driver

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Companhia Brasileira de Distribuicao alias Grupo Pao de Acucar is slated to release third-quarter 2018 results on Oct 25. This traditional food retailer delivered a negative earnings surprise of 6.3% in the last reported quarter and has a mixed surprise record over the trailing four quarters. Let’s see what’s in store for the company this time around.

Assai, Multivarejo Keep Driving Performance

Companhia Brasileira recently came out with third-quarter 2018 sales results, wherein gross sales revenue advanced 12.8% to R$13.3 billion (or nearly $3.4 billion). Results were driven by continued strength at Assai and Multivarejo. Notably, sales at Assai soared 25.5% during the quarter. The Zacks Consensus Estimate for Companhia Brasileira’s third-quarter sales is pegged at almost $3.1 billion. Further, the company’s same store sales jumped 7.1%, excluding calendar effect, courtesy of improvements witnessed across all channels. Also, the company continued to witness market share gains across all banners. Clearly, these factors position the company well for third-quarter earnings release.

Companhia Brasileira is also set to gain from its focus on strategy for 2018-2020, which aims at delivering solid food segment performance. The company plans to achieve this by utilizing its multi-network and multi-format existence to offer consumers the innovative services and products. Apart from this, the company is on track with digital transformation. In line with this, the company launched the My Discount platform at Multivarejo, which has garnered considerable success. Management stated that focus on digital development will be a priority in 2018, given consumers’ evolving shopping patterns. Apart from this, Companhia Brasileira’s core growth plans involve continued organic expansion and stores optimization, enhancing retail format offerings, and extending offerings of financial services (particularly at Assai).

What to Expect?

While stiff competition remains a threat, continued market share gains keep us optimistic about the company’s upcoming results.  The Zacks Consensus Estimate for the quarter under review has remained stable over the past 30 days at 21 cents compared with 12 cents reported in the year-ago period.

What the Zacks Model Unveils

Our proven model doesn’t show that Companhia Brasileira is likely to beat bottom-line estimates this quarter.  For this to happen, the stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Though Companhia Brasileira carries a Zacks Rank #1, its Earnings ESP of 0.00% makes surprise prediction difficult.

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 earnings beat:

Lululemon Athletica Inc. (LULU - Free Report) , a Zacks #1 Ranked stock, has an Earnings ESP of +1.95%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Ralph Lauren Corporation (RL - Free Report) , a Zacks #2 Ranked company, has an Earnings ESP of +0.23%.

PVH Corp. (PVH - Free Report) has an Earnings ESP of +0.30% and a Zacks Rank #2.

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