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Here's How Sally Beauty (SBH) Looks Just Ahead of Q4 Earnings

Zacks Equity Research

Sally Beauty Holdings, Inc. SBH is scheduled to release fourth-quarter fiscal 2019 results on Nov 7. This international specialty retailer and distributor of professional beauty supplies delivered a positive earnings surprise of 3.5% in the last reported quarter. Also, its earnings outperformed the Zacks Consensus Estimate by 3.4% on average in the trailing four quarters.

The Zacks Consensus Estimate for fourth-quarter earnings has been stable over the past 30 days at 53 cents per share. This suggests an increase of 3.9% from the year-ago period’s reported figure. However, the consensus mark for revenues is $957.3 million, indicating a drop of 0.9% from the figure reported in the year-ago quarter.

Sally Beauty Holdings, Inc. Price and EPS Surprise

Sally Beauty Holdings, Inc. Price and EPS Surprise

Sally Beauty Holdings, Inc. price-eps-surprise | Sally Beauty Holdings, Inc. Quote

Key Factors to Note

Sally Beauty’s fourth-quarter results are likely to reflect benefits from the Transformation Plan. To this end, the company’s focus on improving customers’ experience, strengthening e-commerce capacities, curtailing costs and enhancing retail fundamentals is likely to have aided the quarterly performance. Further, Sally Beauty’s supply-chain initiatives to optimize inventory levels and minimize costs are likely to have continued yielding results in the quarter to be reported.

However, we note that sales at the company’s Sally Beauty Supply (“SBS”) and Beauty Systems Group (“BSG”) have been declining for quite some time. SBS has been struggling with challenges in Europe and foreign-currency headwinds. Sales at BSG have been battling weakness in the full-service business and currency woes.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for Sally Beauty this time around. 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. But that’s not the case here.

Sally Beauty has an Earnings ESP of -0.47% and a Zacks Rank #4 (Sell). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks With Favorable Combination

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

Foot Locker FL has an Earnings ESP of +2.80% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Home Depot HD has an Earnings ESP of +0.23% and Zacks Rank #2.

Lowe’s Companies LOW has an Earnings ESP of +1.25% and a Zacks Rank #2.

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