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Factors to Watch Ahead of Helen of Troy's (HELE) Q4 Earnings

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Helen of Troy Limited (HELE - Free Report) is scheduled to release fourth-quarter fiscal 2020 results on Apr 28. The company delivered a positive earnings surprise of 24.3% in the last reported quarter. Further, it has outpaced the Zacks Consensus Estimate by almost 19%, on average, in the trailing four quarters.

The Zacks Consensus Estimate for fourth-quarter earnings is pegged at $1.65 per share, which suggests a decline of 9.3% from the year-ago quarter’s reported figure. The consensus mark has dropped 2.9% in the past 30 days. The consensus mark for revenues is pegged at $406 million, which indicates a 5.6% rise from the year-ago quarter’s reported figure.

Helen of Troy Limited Price and EPS Surprise

Helen of Troy Limited Price and EPS Surprise

 

Helen of Troy Limited price-eps-surprise | Helen of Troy Limited Quote

Key Factors

Helen of Troy has been benefiting from strength in its Leadership brands. These brands account for a significant chunk of the company’s sales and generate solid margins and volumes. The company’s constant investments in these brands that are considered most productive have been delivering robust results. To this end, its buyout of Drybar Products (concluded on Jan 23, 2020) marked the company’s eighth Leadership brand, bolstering its portfolio. Management said that it expects immediate positive contributions from Drybar to its core financial metrics at the Beauty unit as well as the overall results of the company.

Apart from this, the company’s impressive online sales and digital efforts bode well. We note that the Housewares segment has been seeing sturdy growth, thanks to product launches, increased distribution with store customers and higher online sales. Per the last earnings call, management expects a 19-21% increase in Housewares unit sales for fiscal 2020, which also bodes well for the fourth quarter.

However, softness in the Health & Home segment is a concern. The company expects a 2-4% drop in unit sales for fiscal 2020. Apart from this, Helen of Troy has been facing escalated costs. Management expects increased investments, higher incentive compensation expenses and elevated freight and distribution costs for fiscal 2020, which is a threat to the bottom line. Volatile currency movements are also concerning.

What the Zacks Model Unveils    

Our proven model does not conclusively predict an earnings beat for Helen of Troy 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. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Helen of Troy carries a Zacks Rank #4 (Sell) and an Earnings ESP of -5.87%.

Stocks With Favorable Combinations

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.

Hain Celestial (HAIN - Free Report) has an Earnings ESP of +9.24% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Church & Dwight (CHD - Free Report) currently has an Earnings ESP of +3.56% and a Zacks Rank #2.

Kellogg (K - Free Report) currently has an Earnings ESP of +4.60% and a Zacks Rank of 2.

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