The earnings growth scenario in Q3 is pretty clear as we step into the second half of the reporting cycle. Also, the quarter has been persistently heading toward an improvement after five straight quarters of earnings decline. This period is a significant one with both earnings and revenues on the growth trajectory.
Per our Earnings Preview report as of Oct 28, out of the 291 S&P 500 companies that have come up with their quarterly numbers, approximately 73.5% posted positive earnings surprises, while 57.4% beat top-line expectations. According to the report, earnings for the 291 S&P 500 companies that have reported so far are up 2.2% from the same period last year, while revenues have increased 1.3%.
Further, the report projects that earnings for the total S&P 500 companies will improve 2% from the year-ago period with total revenue rising 1.4%. In second-quarter 2016, earnings for the S&P 500 companies declined 2.8%, whereas revenues were flat.
The performance of the index is not restricted to a single sector, and of the 16 Zacks sectors, four are expected to witness an earnings decline in the third quarter, with Auto, Oil/Energy and Transportation being a big drag. However, the Consumer Discretionary sector is witnessing an improvement despite overseas turmoil, fluctuating commodity prices and the Fed’s pending decision over the rate hike.
Total earnings for the Consumer Discretionary sector are estimated to improve 0.2%, whereas revenues are projected to increase 11.7%.
So, let’s see what awaits the following apparel stocks within the Consumer Discretionary sector that are queued up for earnings releases on Nov 1, 2016.
Coach, Inc. (NYSE:COH) the designer and marketer of fine accessories and gifts, and house of lifestyle brands, is slated to release first-quarter fiscal 2017 results. The company surpassed the Zacks Consensus Estimate in the trailing four quarters by an average of 7.4%.
Our proven model does not conclusively show that Coach is likely to beat earnings estimates this quarter. The stock has an Earnings ESP of 0.00%, as the as the Most Accurate estimate and the Zacks Consensus Estimate both stand at 44 cents. Coach’s Zacks Rank #3 (Hold) increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
Coach is undergoing a brand transformation and introducing modern luxury concept stores in key markets. The acquisition of Stuart Weitzman has been accretive to its performance and is being viewed as a significant step in its efforts toward becoming a multi-brand company. However, foreign currency headwinds and cautious consumer spending remain a concern for the company. (Read: Coach Q1 Earnings: Stock to Beat Estimates Again?)
Another stock, Steven Madden, Ltd. (NASDAQ:SHOO) is scheduled to release its third-quarter 2016 results. This designer and marketer of fashion-forward footwear and accessories for women, men and children has an Earnings ESP of 0.00%. The stock carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The company’s Zacks Rank #3 increases the predictive power of ESP. However, its ESP of 0.00% makes surprise prediction difficult. The Zacks Consensus Estimate for the quarter currently stands at 70 cents.
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COACH INC (COH): Free Stock Analysis Report
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