Textile Stocks To Report Earnings On May 2: COH And HBI

The first-quarter 2017 earnings season seems to be in full swing. Per the Earnings Preview as of Apr 28, 2017, earnings for the total S&P 500 companies are likely to improve 11.2% from the year-ago period, with total revenue rising 6.2%.

Per the report, out of the 288 S&P 500 companies that have come up with their quarterly numbers, approximately 76.4% posted positive earnings surprises, while 68.1% outperformed top-line expectations. Total earnings for these index members were up 13.7% from the year-ago quarter, while revenues increased 8.2%.

In fact, performance of the index is not restricted to a single sector, and of the 16 Zacks sectors, three are expected to witness an earnings decline. Of these, Autos and Transportation are likely to be the major drags.

Textile Stocks form part of the Consumer Discretionary sector. Per the report, the earnings growth for the sector looks impressive. While total first-quarter earnings for the Consumer Discretionary sector are estimated to rise 8.1%, revenues are projected to improve 11.3%. However, the sector is currently placed at bottom 44% of the Zacks Classified sectors (9 out of 16).

As of Apr 28, 42.9% of the total number of the S&P 500 companies in the Consumer Discretionary sector has reported their results. Out of these, 80% companies posted an earnings beat, while 53.3% surpassed revenue estimates.

So, let’s see what awaits the following textile stocks that are queued up for earnings releases on May 2.

Coach, Inc. (NYSE:COH) , designer and marketer of fine accessories and gifts as well as house of lifestyle brands, is slated to report third-quarter fiscal 2017 results, before the market opens. The company’s earnings have outpaced the Zacks Consensus Estimate for 12 straight quarters now, with a trailing four-quarter average of 6.2%.

Our proven model does not conclusively show earnings beat for Coach 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. You may uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Coach has an Earnings ESP of 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 44 cents. Though the company’s Zacks Rank #3 increases the predictive power of ESP, but we need to have a positive ESP in order to be confident about earnings surprise.

Coach is undergoing a brand transformation and introducing modern luxury concept stores in key markets. The acquisition of Stuart Weitzman has been accretive to performance and is being viewed as a significant step in efforts toward becoming a multi-brand company. However, management had earlier projected that the third quarter nominal revenue is likely to be impacted by adverse currency fluctuations as well as calendar shift in North America, with Easter falling in the fourth quarter this fiscal year compared with the third quarter in the last fiscal. (Read more: Will Coach Pull a Surprise Again in Q3 Earnings?)

Now, let’s take a sneak peek at Hanesbrands Inc. (NYSE:HBI) , leading apparel retailer, which is set to report first-quarter 2017 results. The company’s earnings have missed the Zacks Consensus Estimate in two of the past four quarters. However, it posted an average beat of 1.9% in the trailing four quarters.

Hanesbrands has an Earnings ESP of 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 28 cents. The company carries a Zacks Rank #3. While a favorable Zacks Rank increases the predictive power of ESP, its ESP of 0.00% makes surprise prediction difficult. You can see the complete list of today’s Zacks #1 Rank stocks here.

Hanesbrands projects its first-quarter net sales to be roughly $1.38 billion, up from $1.22 billion in the prior-year quarter. However, the Zacks Consensus Estimate for the same is currently pegged higher at $1.39 billion. Further, it expects adjusted earnings in the band of 28–29 cents per share versus 27–29 cents, guided earlier. The guidance is higher than 26 cents reported in the year-ago quarter. In addition, Hanesbrands is armed with a robust brand portfolio, alongside undertaking strategic initiatives to boost profitability.

Nevertheless, the company has been grappling with headwinds of late. Lower-than-expected traffic at its stores, limited international exposure and deep focus on premium brands remain potent concerns, besides the soft consumer spending environment. Notably, all these factors have been weighing upon Hanesbrands’ sales that missed the Zacks Consensus Estimate in 11 out of the past 12 quarters. (Read more: What to Expect from Hanesbrands this Earnings Season?)

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