U.S. Markets open in 7 hrs 5 mins

Can Adidas (ADDYY) Keep Earnings Beat Trend Alive in Q4?

Zacks Equity Research

Adidas AG ADDYY is slated to release fourth-quarter 2018 results on Mar 13.

The company boasts an impressive earnings surprise trend, having surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average being 55%.

The Zacks Consensus Estimate for fourth-quarter earnings is pegged at 23 cents, reflecting year-over-year growth of roughly 10%. Notably, earnings estimates moved down by a penny over the past 30 days. For revenues, the consensus mark stands at $5,966 million, mirroring nearly 0.2% growth from the year-ago quarter tally.

Adidas AG Price and EPS Surprise

Adidas AG Price and EPS Surprise | Adidas AG Quote

Let’s see how things are shaping up prior to this announcement.

Factors at Play

Strength in the Adidas brand, particularly in North America, is driving the company’s quarterly performance. Revenues at this brand grew 10% in third-quarter 2018 owing to robust growth in Sport Inspired and high-single-digit improvement in Sport Performance. These factors also aided the company’s overall top line, which grew 8% at constant currency.

Moreover, the company has been gaining from solid e-commerce growth and a double-digit increase in direct-to-consumer revenues, which are significantly contributing to its top line. All these growth drivers along with Adidas’ constant product launches and strong marketing initiatives make us hopeful about the company’s prospects.

Adidas expects strong top- and bottom-line growth in 2018. It anticipates currency-neutral revenues to advance nearly 8-9%, with solid growth in North America. Moreover, net income from continuing operations is projected to improve 16-20% to €1.660-€1.720 billion.

However, unfavorable currency rates as well as higher costs might weigh on the company’s top- and bottom-line performance in the to-be-reported quarter.

What the Zacks Model Unveils

Our proven model conclusively shows that Adidas is likely to beat earnings estimates in the fourth quarter. This is because a stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Adidas’ Earnings ESP of +13.04% combined with a Zacks Rank #3 make us confident of an earnings beat.

Other Stocks With Favorable Combination

Here are some other companies that you may want to consider as our model shows that these too have the right combination of elements to post an earnings beat:

Bed Bath & Beyond Inc. BBBY has an Earnings ESP of +1.82% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

PVH Corp. PVH has an Earnings ESP of +1.14% and a Zacks Rank #2.

The Michaels Companies, Inc. MIK has an Earnings ESP of +0.70% and a Zacks Rank #3.

Today's Best Stocks from Zacks
 
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.

This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.

See their latest picks free >>


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
 
The Michaels Companies, Inc. (MIK) : Free Stock Analysis Report
 
Bed Bath & Beyond Inc. (BBBY) : Free Stock Analysis Report
 
Adidas AG (ADDYY) : Free Stock Analysis Report
 
PVH Corp. (PVH) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research