Factors to Note Before Helen of Troy's (HELE) Q3 Earnings
Helen of Troy Limited HELE is likely to witness a year-over-year decline in the top and the bottom line when it reports third-quarter fiscal 2022 earnings on Jan 6. The Zacks Consensus Estimate for revenues is pegged at $537 million, suggesting a drop of 15.9% from the prior-year quarter’s reported figure.
The Zacks Consensus Estimate for earnings has remained stable over the past 30 days at $3.15 per share, indicating a 16.2% fall from the figure reported in the prior-year period. The consumer products provider has a trailing four-quarter earnings surprise of 19.8%, on average. Helen of Troy delivered an earnings surprise of 24.4% in the last reported quarter.
Helen of Troy Limited Price and Consensus
Helen of Troy Limited price-consensus-chart | Helen of Troy Limited Quote
Key Factors to Consider
Helen of Troy is reeling under global supply-chain disruptions along with elevated freight and labor costs. This led to a rise in SG&A expenses of 9.1% year over year to $142.9 million, while the metric as a percentage of sales expanded 540 basis points to 30.1% during the second quarter of fiscal 2022. For fiscal 2022, management expects inflationary cost pressures in the range of $60-$65 million. This raises concerns for the quarter under review.
In the last reported quarter, sales in the company’s Health & Home segment saw tough comparisons with the year-ago period as HELE witnessed a massive spike in pandemic-induced demand for healthcare products in the year-ago period. This might have been a concern in the third quarter as well.
However, strength in the company’s Leadership Brands has been a driver. These brands account for a significant portion of the company's sales, which generate solid margins and volumes. The company's constant investments in these brands, which are considered to be the most productive, have been delivering robust results. The company made a similar move when it acquired Drybar Products in January 2020. On its last earnings call, management highlighted that Drybar Products has been contributing to the company's growth and margin improvement as stores and salons are reopening following pandemic-led closures. Impressive product introductions in the particular brand have also been driving growth.
Apart from this, Helen of Troy’s focus on investing in consumer-centric innovation, digital marketing and media, new packaging, enhanced production and distribution capacity as well as direct-to-consumer channels among others bodes well. Management has also been on track to continue investing in key growth areas as part of its Phase II Transformation efforts.
What the Zacks Model Unveils
Our proven model doesn’t conclusively predict an earnings beat for Helen of Troy this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. However, that’s not the case here.
Helen of Troy currently has a Zacks Rank #3 and an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Companies Likely to Post a Beat
McCormick MKC has an Earnings ESP of +0.75% and holds a Zacks Rank of 3. McCormick is expected to register growth in the top and bottom lines when it reports fourth-quarter fiscal 2021 numbers. The Zacks Consensus Estimate for MKC’s quarterly revenues is pegged at $1,707 million, which suggests growth of 9.6% from the prior-year quarter’s reported figure. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for McCormick’s quarterly earnings has been unchanged in the past 30 days at 80 cents per share, suggesting 1.3% growth from the year-ago reported number. McCormick has delivered an earnings beat of 10.3%, on average, in the trailing four quarters.
Constellation Brands STZ has an Earnings ESP of +2.13% and a Zacks Rank of 3. The company is expected to witness a decline in the top and bottom lines when it reports third-quarter fiscal 2022 numbers. The Zacks Consensus Estimate for STZ’s quarterly revenues is pegged at nearly $2.3 billion, which suggests a drop of 6.4% from the prior-year quarter’s reported figure.
The Zacks Consensus Estimate for Constellation Brands’ quarterly earnings has been unchanged in the past 30 days at $2.82 per share, suggesting an 8.7% decline from the year-ago reported number. STZ has delivered an earnings beat of 8.8%, on average, in the trailing four quarters.
The J.M. Smucker SJM has an Earnings ESP of +0.24% and a Zacks Rank #3. The J.M. Smucker is anticipated to register a decline in the top and bottom lines when it reports third-quarter fiscal 2022 results. The Zacks Consensus Estimate for quarterly revenues is pegged at $1,972 million, indicating a drop of 1.3% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for The J.M. Smucker’s bottom line has moved down by a penny in the past 30 days to $2.07 per share. The consensus estimate suggests a drop of 15.5% from the year-ago quarter’s reported figure. SJM has delivered an earnings beat of 10.8%, on average, in the trailing four quarters.
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