U.S. Markets closed

Will Soft Revenues Mar Prestige Consumer's (PBH) Q3 Earnings?

Zacks Equity Research

Prestige Consumer Healthcare Inc. PBH is scheduled to report third-quarter fiscal 2019 results on Feb 7, before market open. In the last reported quarter, the company delivered a positive earnings surprise of 3.2%. Let’s see what awaits this quarterly release.

How are Estimates Faring?

The Zacks Consensus Estimate for third-quarter earnings is pegged at 71 cents, reflecting a 1.4% increase from 70 cents per share registered in the year-ago quarter. Notably, the consensus mark has moved south by 8 cents over the past 30 days. For revenues, the same stands at $244 million, down approximately 10% from the year-ago quarter’s figure.

Prestige Consumer Healthcare Inc. Price, Consensus and EPS Surprise

Prestige Consumer Healthcare Inc. Price, Consensus and EPS Surprise | Prestige Consumer Healthcare Inc. Quote

Factors to Consider

Prestige Consumer has been gaining from strategic mergers and acquisitions. The company’s notable buyouts include BC and Goody's, Fleet, DenTek Holdings and Hydralyte. Moreover, the company is on track with its strategy of improving brands and marketing capabilities of its acquired businesses.

Also, strong consumption trend in some of its core brands, especially in the healthcare category, is likely to prove beneficial for Prestige Consumer. Markedly, Prestige Consumer witnessed company-wide consumption growth of approximately 3% in fiscal 2018. In fact, management had earlier stated that it expects 2-3% growth in consumption rates in fiscal 2019.

However, we note that Prestige Consumer’s revenues have been sluggish for a while now. In the first and the second quarters of fiscal 2019, the top line declined on changes in accounting policies and packaging expenses of Goody’s and BC brands. Further, the company recently reported soft preliminary revenue numbers for third quarter.

Per the preliminary results, revenues of nearly $241.4 million is expected for the third quarter, reflecting a decline of 10.8% from the year-ago quarter’s tally. Management highlighted that inventory reductions across certain key retailers weighed on the company’s top-line performance for the said period. Notably, persistent weakness in revenues is likely to hurt Prestige Consumer’s profitability and impair business growth momentum.

These apart, the company is exposed to threats emerging from adverse foreign currency fluctuations and stiff competition.

Additionally, we note that the Zacks Consensus Estimate for International OTC Healthcare and North American OTC Healthcare segments for third-quarter revenues is pegged at $21.3 million and $220 million, respectively. This reflects a respective decline of 17.2% and 2.7% from the year-ago quarter’s figure on a sequential basis.

What Does the Zacks Model Say?

Our proven model does not conclusively show that Prestige Consumer is likely to beat estimates third-quarter fiscal 2019. A stock needs to have both — a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP — for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Prestige Consumer has an Earnings ESP of 0.00% and a Zacks Rank #3, which make surprise prediction difficult. You can see the complete list of today’s Zacks #1 Rank stocks here.

Other Stocks With Favorable Combination

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

Deckers Outdoor Corporation DECK has an Earnings ESP of +3.63% and a Zacks Rank #1.

World Wrestling Entertainment, Inc. WWE has an Earnings ESP of +26.31% and a Zacks Rank #1.

lululemon athletica inc. LULU has an Earnings ESP of +0.82% and a Zacks Rank #2.

Zacks' Top 10 Stocks for 2019

In addition to the stocks discussed above, wouldn't you like to know about our 10 finest buy-and-holds for the year?

From more than 4,000 companies covered by the Zacks Rank, these 10 were picked by a process that consistently beats the market. Even during 2018 while the market dropped -5.2%, our Top 10s were up well into double-digits. And during bullish 2012 – 2017, they soared far above the market's +126.3%, reaching +181.9%.

This year, the portfolio features a player that thrives on volatility, an AI comer, and a dynamic tech company that helps doctors deliver better patient outcomes at lower costs.

See Stocks Today >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
World Wrestling Entertainment, Inc. (WWE) : Free Stock Analysis Report
Prestige Consumer Healthcare Inc. (PBH) : Free Stock Analysis Report
Deckers Outdoor Corporation (DECK) : Free Stock Analysis Report
To read this article on Zacks.com click here.