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Will Input Costs Hurt Helen of Troy's (HELE) Q2 Earnings?

Zacks Equity Research

Helen of Troy Limited HELE is slated to release second-quarter fiscal 2020 results on Oct 8, after market close. The company’s earnings surpassed the Zacks Consensus Estimate in the trailing four quarters, the average being 14%. Let’s see how things are placed ahead of the release for this renowned beauty products as well as other personal and home care products player.

Aspects Likely to Impact Q2

Helen of Troy’s leadership brands are performing well, courtesy of management’s consistent investments in product launches and marketing. In this context, brands like OXO, Honeywell, Braun, PUR, Hydro Flask, Vicks and Hot Tools are well positioned to enhance market share. We expect leadership brands to remain an upside in the second quarter. Additionally, the company is gaining from advancements in the e-commerce arena. Furthermore, sturdy growth in the Houseware unit, backed by prudent innovations as well as improved brick and mortar business, is encouraging. These upsides are likely to prevail and support performance in the second quarter.     

In spite of these positive factors, Helen of Troy’s performance is exposed to certain headwinds. The company is experiencing pressures from rising freight, tariffs, advertising and new product development costs that was witnessed during the fiscal first quarter. Persistent rise in costs is a threat to the company’s bottom line in the quarter to be reported.

We note that the Personal Care business, which is a part of the Beauty unit, has been sluggish for a while. This will likely exert pressure on the company’s performance in the fiscal second quarter. Moreover, the impact of any adverse currency fluctuation on quarterly results cannot be counted out.

Helen of Troy Limited Price, Consensus and EPS Surprise

 

Helen of Troy Limited Price, Consensus and EPS Surprise

Helen of Troy Limited price-consensus-eps-surprise-chart | Helen of Troy Limited Quote

 

Estimates are Unimpressive

The Zacks Consensus Estimate for fiscal second quarter earnings has been stable at $1.97 in the past 30 days. The estimate indicates a decline of 0.5% from earnings delivered in the year-ago quarter.

Moreover, the consensus mark for revenues is pegged at $383.9 million, indicating a drop of nearly 2.5% from the year-ago quarter’s tally.

What Does the Zacks Model Say?

Our proven model doesn’t show that Helen of Troy is likely to beat bottom-line estimates this quarter. For this to happen, a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.

Though Helen of Troy carries a Zacks Rank #3, its Earnings ESP of 0.00% makes surprise prediction difficult. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks Poised to Beat Earnings Estimates

Here are some companies you may want to consider as our model shows that these have the right combination of elements to beat estimates.

WD-40 Company WDFC has an Earnings ESP of +2.44% and a Zacks Rank of 2.

Constellation Brands, Inc STZ has an Earnings ESP of +2.44% and a Zacks Rank #3.

Brown-Forman Corporation BF.B has an Earnings ESP of +0.95% and a Zacks Rank of 3.

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Constellation Brands Inc (STZ) : Free Stock Analysis Report
 
Brown-Forman Corporation (BF.B) : Free Stock Analysis Report
 
WD-40 Company (WDFC) : Free Stock Analysis Report
 
Helen of Troy Limited (HELE) : Free Stock Analysis Report
 
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