Will Spectrum Brands (SPB) Beat Earnings this Season?

Spectrum Brands Holdings Inc. (SPB) is scheduled to report its first-quarter fiscal 2014 results after the market closes on Jan 29. Last quarter, this global consumer products company posted a positive earnings surprise of approximately 3.53%. Let's see how things are shaping up for this announcement.

Growth Factors in the Past Quarter

Spectrum Brands’ strong fourth-quarter fiscal 2013 performance was mainly driven by improved top lines that stemmed from the Hardware & Home Improvement (:HHI) business, which became accretive. The company had acquired Hardware & Home Improvement in Dec 2012. On a segmental basis, Global Batteries & Appliances, Home & Garden and HHI segments contributed to sales growth, while sales at the Global Pet Supplies segment was an offset. The company remains optimistic of its fiscal-2014 performance, projecting sales growth at or above the rate of GDP compared with fiscal-2013 net sales.

Earnings Whispers?

Our proven model does not conclusively project Spectrum Brands as 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 estimates. However, this is not the case here due to the following factors:

Zacks ESP: ESP for Spectrum Brands is 0.00% since the Most Accurate estimate stands at $1.02 per share, which is in line with the Zacks Consensus Estimate.

Zacks #3 Rank (Hold): Spectrum Brands' Zacks Rank #3 increases the predictive power of ESP. However, we also need to have a positive ESP to be confident of an earnings surprise call. We caution against stocks with a Zacks Rank #4 and #5 (Sell-rated stocks) going into earnings announcement, especially when the company is undergoing negative estimate revisions.

Other Stocks to Consider

Spectrum Brands is not the only firm we are looking up to this earnings season. Our model shows that the following stocks have the right combination to post an earnings beat:

Michael Kors Holdings Limited’s (KORS) Earnings ESP stands at +1.15% and it carries a Zacks Rank #2 (Buy).

Abercrombie & Fitch Co. (ANF) has an Earnings ESP of +1.96% and a Zacks Rank #2 (Buy).

The Home Depot Inc. (HD) with an Earnings ESP of +1.39% holds a Zacks Rank #2 (Buy).

Read the Full Research Report on HD
Read the Full Research Report on ANF
Read the Full Research Report on KORS
Read the Full Research Report on SPB


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