Coach (COH) Q1 Earnings: Stock To Beat Estimates Again?

Coach, Inc. (NYSE:COH) is expected to release first-quarter fiscal 2017 results on Oct 25. The question lingering in investors’ minds is whether this designer and marketer of fine accessories and gifts as well as house of lifestyle brands, will be able to continue with its positive earnings surprise streak in the quarter to be reported. The company surpassed the Zacks Consensus Estimate in the trailing four quarters by an average of 7.4%. Let’s see how things are shaping up prior to this announcement.

Zacks Model Shows Unlikely Earnings Beat

Our proven model does not conclusively show that Coach is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Coach has an Earnings ESP of 0.00% as the Most Accurate estimate and the Zacks Consensus Estimate both stand at 44 cents. Coach’s Zacks Rank #3 increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.

Factors Influencing this Quarter

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. Moreover, management has undertaken transformation initiatives revolving around product, stores and marketing, which are likely to have a favorable impact in the quarter to be reported.

These initiatives seem feasible given a mature domestic market, foreign currency headwinds and cautious consumer spending. Coach sells products that are discretionary in nature and consequently depends upon consumers’ disposable income, which is sensitive to macroeconomic factors. Additionally, fashion obsolescence remains the main concern for the company’s business model.

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 an earnings beat:

Avon Products Inc. (NYSE:AVP) has an Earnings ESP of +33.33% and sports Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Marinemax Inc. (NYSE:HZO) has an Earnings ESP of +31.82% and also sports Zacks Rank #1.

Big Lots Inc. (NYSE:BIG) has an Earnings ESP of +50.00% and carries Zacks Rank #2.

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