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Factors Likely to Shape Up Funko's (FNKO) Earnings in Q2

Zacks Equity Research

Funko, Inc. FNKO is scheduled to release second-quarter 2019 results on Aug 8. This pop culture consumer products company boasts a splendid earnings surprise record, having significantly outperformed the Zacks Consensus Estimate in the trailing four quarters.

The Zacks Consensus Estimate for earnings in the second quarter stands at 13 cents, suggesting an increase of 85.7% from 7 cents reported a year ago. Notably, the consensus estimate has been stable over the past 30 days. The consensus mark for revenues is pegged at $170.9 million, indicating a 23.2% rise from the prior-year reported figure.

Funko, Inc. Price and EPS Surprise

Funko, Inc. Price and EPS Surprise

Factors at Play

Funko is likely to gain from its focus on content creation, given the expected rise in consumption of content. In this regard, the company is committed toward expanding product offerings, especially for young customers. Moreover, encouraged by its performance in Best Buy stores, the company earlier announced plans to launch a Funko branded section in the second quarter. We expect these factors to get favorably reflected in the company’s upcoming performance.

Notably, the global business of pop culture is worth more than $0.5 trillion annually. Driven by this, the company foresees solid growth in its softline products and accessories. This apart, sales growth in Europe is anticipated to be robust.

Further, the company’s Funk app launched in the last reported quarter is performing well with roughly 1 million downloads across 155 countries only within the first three weeks of its debut. The app, which is touted to help the company strengthen its direct-to-consumer business, is likely to leave a positive impact on the quarter under review.

However, the company’s plans to make investments to enhance its operations across the United States and international regions might entail higher costs. Talking of costs, the company has been witnessing rising SG&A expenses for the past few quarters. Such downsides may pose hurdles to second-quarter.

What the Zacks Model Unveils

Our proven model doesn’t conclusively show that Funko is likely to beat estimates in the June 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.

Funko has an Earnings ESP of 0.00% and Zacks Rank #3, which makes surprise prediction difficult.

Stocks Poised to Beat on Earnings

Here are a few companies you may want to consider as our model shows that these have the right combination of elements to surpass expectations this time around:

BJ’s Wholesale Club Holdings BJ has an Earnings ESP of +21.05% and a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Viacom VIAB has an Earnings ESP of +2.08% and a Zacks Rank #3.

AMC Entertainment Holdings AMC has an Earnings ESP of +15.29% and a Zacks Rank of 3.

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Click to get this free report Viacom Inc. (VIAB) : Free Stock Analysis Report AMC Entertainment Holdings, Inc. (AMC) : Free Stock Analysis Report BJ's Wholesale Club Holdings, Inc. (BJ) : Free Stock Analysis Report Funko, Inc. (FNKO) : Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research