Will Helen of Troy (HELE) Surprise this Earnings Season?


Helen of Troy Ltd. (HELE) is set to report first-quarter fiscal 2015 results on Jul 9. Last quarter, the company posted negative surprise of 4.5%. Let us see how things are shaping up for this announcement.

Factors to be Considered this Quarter

Helen of Troy has been delivering soft results for the past few quarters mainly due to weaker-than-expected revenues and currency headwinds. Weakening consumer spending has resulted in lower sales in all its product categories. Moreover, a challenging retail environment, stiff competition and high promotional discounts have resulted in margin contraction in the past few quarters.

However, we are encouraged by Helen of Troy’s turnaround initiatives. The company announced the reorganization of its corporate departments and functions during the last earnings conference call. Management is now divided into three global shared service groups, each headed by a member of the executive leadership team. This is expected to increase productivity and strengthen the company’s operations.

The new management team has promised to build better communication across geographies, product categories and functional areas. It has geared up market research and increased investments in innovation to ensure a steady product pipeline. The company has also ramped up its investment in advertising. These initiatives may prove to be beneficial in improving the top line in the coming quarter.

Earnings Whispers?

Our proven model does not conclusively show that Helen of Troy is likely to beat earnings this quarter. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 to surpass earnings estimate. However, that is not the case here due to the following factors:

Zacks ESP: ESP for Helen of Troy is 0.00%.

Zacks Rank: Helen of Troy has a Zacks Rank #3 (Hold) which when combined with a 0.00% ESP makes surprise prediction difficult.

We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

Here are some other companies that investors may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:

Johnson & Johnson (JNJ), with Earnings ESP of +0.65% and a Zacks Rank #2 (Buy).

ColumbiaSports Inc. (COLM), with Earnings ESP of +13.51% and a Zacks Rank #1 (Strong Buy).

TreeHouse Foods Inc. (THS), with Earnings ESP of +1.21% and a Zacks Rank #1 (Strong Buy).

Read the Full Research Report on COLM
Read the Full Research Report on JNJ
Read the Full Research Report on HELE
Read the Full Research Report on THS

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