Will Coach (COH) Miss Q4 Earnings in Mature Domestic Market?

Zacks

Coach Inc. (COH), the designer and marketer of fine accessories and gifts, is expected to report its fourth-quarter fiscal 2014 results on Jul 29. In the last quarter, it posted a positive surprise of 7.9%. Let’s see how things are shaping up for this announcement.

Factors Influencing the Quarter

A mature domestic market and difficult consumer spending environment remain causes of concern. Earlier, Coach has predicted sales decline in mid-single digits in constant currency and in high single digits in dollar terms for fiscal 2014.

Earnings Whispers?

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, #2 or 3 for this to happen. This is not the case here, as you will see below.

Zacks ESP: Earnings ESP for Coach is -7.41%. This is because the Most Accurate estimate stands at 50 cents, while the Zacks Consensus Estimate is pegged at 54 cents.

Zacks Rank: Coach’s Zacks Rank #5 (Strong Sell) lowers the predictive power of ESP. We caution against stocks with a Zacks Ranks #4 and 5 (Sell-rated stocks) 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:

Big Lots Inc. (BIG) has an Earnings ESP of +3.33% and a Zacks Rank #2 (Buy).

Williams-Sonoma Inc. (WSM) has an Earnings ESP of +1.89% and a Zacks Rank #2.

Dollar General Corp. (DG) has an Earnings ESP of +1.21% and a Zacks Rank #3 (Hold).

Read the Full Research Report on COH
Read the Full Research Report on DG
Read the Full Research Report on BIG
Read the Full Research Report on WSM


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