Black Diamond, Inc. (NASDAQ:BDE) is set to report first-quarter 2016 results on May 2, after the market closes. Last quarter, the company posted a positive earnings surprise of 150.00%. However, Black Diamond has surpassed earnings estimates thrice in the trailing four quarters, with a significant average positive surprise of 91.44%.
Let’s see how things are shaping up for the upcoming announcement.
Factors at Play
Black Diamond is a sporting goods company which has been witnessing a consistent growth in sales over the past few quarters, backed by higher sales of its apparel brand and the continued rollout of POC's cycling products, including the new spring 2015 "Race Day" line and expanded assortment of eyewear.
During the fourth quarter the company implemented a few strategies like streamlining of manufacturing processes and overhead cost reduction. This should improve margins in the to-be-reported quarter.
However, a tough retail environment, combined with warmer-than-expected weather conditions on the East Coast (that affected categories like gloves) are likely to keep revenues under pressure.
Earnings Whispers
Our proven model does not conclusively show that Black Diamond is likely to beat estimates this quarter. That 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. That is not the case here as you will see below.
Negative Zacks ESP: Black Diamond’s Earnings ESP is -150.00%. This is because the Most Accurate estimate is pegged at a loss of 10 cents while the Zacks Consensus Estimate stands at a loss of 4 cents.
Zacks Rank: Black Diamond has a Zacks Rank #3 (Hold) which increases the predictive power of ESP. However, the company’s negative ESP makes surprise prediction difficult.
Meanwhile, we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Stocks That Warrant a Look
Here are some stocks in the broader consumer discretionary sector that investors may consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Boyd Gaming Corp. (NYSE:BYD) with an Earnings ESP of +3.33% and a Zacks Rank #3.
CBS Corp. (NYSE:CBS) , with an Earnings ESP of +1.08% and a Zacks Rank #3.
Central Garden & Pet Co. (NASDAQ:CENT) , with has an Earnings ESP of +3.39% and a Zacks Rank #2.
BOYD GAMING CP (BYD): Free Stock Analysis Report
CBS CORP (CBS): Free Stock Analysis Report
BLACK DIAMOND (BDE): Free Stock Analysis Report
CENTRAL GARDEN (CENT): Free Stock Analysis Report
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