Will Columbia Sportswear (COLM) Q3 Earnings Ruin Trend?

Columbia Sportswear Company (NASDAQ:COLM) is slated to report third-quarter 2016 results on Oct 27. Last quarter, the company delivered a positive earnings surprise of 33.33%. In fact, it has topped earnings estimates consistently in the trailing four quarters, with an average of 22.9%. Let’s see how things are shaping up for this announcement.

Factors Influencing This Quarter

While Columbia Sportswear boasts a strong earnings surprise history, things don’t appear to be as rosy for the upcoming third-quarter results. Just like other apparel companies, Columbia Sportswear remains susceptible to the global economic challenges, which also impacted its results in the previous quarter. Further, the company continues to expect foreign currency headwinds to hurt its results, as reflected by its outlook.

Management’s 2016 outlook incorporates the anticipated effects of recent macroeconomic headwinds like bankruptcies of several U.S.-based wholesale customers; 2016 advance orders in response to slowing traffic and the lingering effects of last year's warm winter, along with further deterioration of the overall Korean outerwear market.

These factors, along with stiff competition in the sportswear space and expectations of intense promotional activities in early fall make us apprehensive of the upcoming results.

Earnings Whispers

Our proven model does not conclusively show that Columbia Sportswear is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below:

Zacks ESP: Columbia Sportswear currently has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at $1.17. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.

Zacks Rank: Columbia Sportswear carries a Zacks Rank #4 (Sell). We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks that Warrant a Look

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:

Big 5 Sporting Goods Corp. (NASDAQ:BGFV) , scheduled to release earnings on Nov 1, has an Earnings ESP of +3.33% and a Zacks Rank #1 (Strong Buy).

Marinemax Inc. (NYSE:HZO) , expected to release earnings on Nov 1, has an Earnings ESP of +31.82% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Avon Products Inc. (NYSE:AVP) , slated to release earnings on Nov 3, has an Earnings ESP of +33.33% and a Zacks Rank #1.

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