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American Outdoor Brands (AOBC) Q3 Earnings: What to Expect?

Zacks Equity Research

American Outdoor Brands Corporation AOBC is scheduled to report third-quarter fiscal 2017 results, after market close on Mar 2. The gun maker has an impressive earnings history, beating estimates in all of the last four quarters at an average of 26.69%. Let’s see how things are shaping up for this quarter.

Factors to Consider

During the second quarter earnings call, American Outdoor Brands revealed that it has a number of product launches scheduled for the third quarter. Such launches are expected to increase the company’s operating expenses for the quarter.

Traditionally, the third quarter usually marks the strongest shipping quarter of the year. Again, the company expects the firearms segment sales to be strong in the reported quarter. However, the accessories segment sales are not expected to be strong because of its post-holiday season.  

In fact, for the third quarter the company expects revenues in the range of $230 million to $240 million. Non-GAAP earnings per share are expected in the 52–57 cents band.

The FBI's National Instant Criminal Background Check System (“NICS”) showed a 9% year-over-year downward movement in permit applications in the three-month period between Nov 2016 and Jan 2017. Though one cannot draw a one-to-one co-relation between the NICS report and the number of firearms sold, any upward or downward movement in firearm background checks is likely to have a proportional impact on firearm sales.

The Zacks Consensus Estimate for American Outdoor Brands’ third-quarter earnings projects a decline of 8.81%, while the consensus for revenues hints at an improvement of 11.02% on a year-over-year basis.

American Outdoor Brands Corporation Price and EPS Surprise


American Outdoor Brands Corporation Price and EPS Surprise | American Outdoor Brands Corporation Quote

Earnings Whispers

Our proven model does not conclusively show that American Outdoor Brands is likely to beat earnings this quarter. That 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. Unfortunately, that is not the case here, as you will see below.

Zacks ESP: The Earnings ESP for the company is -1.85% as the Most Accurate estimate stands at 53 cents, while the Zacks Consensus Estimate is a little higher at 54 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter

Zacks Rank: American Outdoor Brands’ Zacks Rank #3, when combined with negative ESP, makes surprise prediction difficult.

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

A Stock to Consider

Here is a stock in the Aerospace-Defense Equipment space worth considering on the basis of our model, which shows that it has the right combination to pull off a beat:

HEICO Corporation HEI will report first-quarter fiscal 2017 results on Feb 28. The company has an Earnings ESP of +1.79% and holds a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Peer Releases

Rockwell Collins Inc.’s COL adjusted earnings per share of $1.20 surpassed the Zacks Consensus Estimate of $1.15 by 4.3%. Reported earnings, however, slipped 0.8% from $1.21 per share earned a year ago.

Spirit AeroSystems Holdings, Inc. SPR posted fourth-quarter 2016 adjusted earnings of 89 cents per share, which missed the Zacks Consensus Estimate of $1.02 by 12.7%. Earnings also fell 6.3% from the year-ago figure of 95 cents owing to a decline in revenues.

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