Is Spectrum Brands (SPB) Poised to Beat on Q1 Earnings?
We expect Spectrum Brands Holdings, Inc. SPB to beat expectations when it reports first-quarter fiscal 2016 results on Feb 2.
Why a Likely Positive Surprise?
Our proven model shows that Spectrum Brands is likely to beat earnings because it has the right combination of the two key ingredients.
Zacks ESP: Spectrum Brands currently has an Earnings ESP of +2.83%. This is because the Most Accurate estimate of $1.09 stands above the Zacks Consensus Estimate of $1.06. A favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive earnings surprise.
Zacks Rank: Spectrum Brands carries a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating earnings. Conversely, Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.
The combination of Spectrum Brands’ Zacks Rank #3 and positive ESP make us reasonably confident of an earnings beat.
What is Driving the Better-than-Expected Earnings?
Spectrum Brands delivered record results for the sixth straight year in fiscal 2015, mainly backed by strength in the Home and Garden and HHI segments, coupled with robust performance of the personal care and small appliances categories. Also, the company made significant acquisitions and exited underperforming businesses in fiscal 2015. This is likely to enhance its brand structure and product assortments, improve margins and drive growth. These factors, along with expected benefits from geographic expansion, cost savings and increased market share, keep the company hopeful of generating solid sales and earnings growth in fiscal 2016. Consequently, we remain optimistic about the upcoming results.
Stocks that Warrant a Look
Here are some other companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
L Brands, Inc. LB has an Earnings ESP of +0.50% and a Zacks Rank #2 (Buy).
Lowe's Companies, Inc. LOW has an Earnings ESP of +6.78% and a Zacks Rank #2.
The Home Depot, Inc. HD has an Earnings ESP of +0.91% and a Zacks Rank #3.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
HOME DEPOT (HD): Free Stock Analysis Report
LOWES COS (LOW): Free Stock Analysis Report
SPECTRUM BRANDS (SPB): Free Stock Analysis Report
L BRANDS INC (LB): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
