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Spectrum Brands (SPB) to Report Q2 Earnings: What's in Store?

Zacks Equity Research

Spectrum Brands Holdings, Inc. SPB is set to report second-quarter fiscal 2019 results on May 8, before market open.

The company lagged the earnings estimates in two of the trailing three quarters. In the last reported quarter, the company witnessed a negative earnings surprise of 150%.

Nevertheless, the Zacks Consensus Estimate for second-quarter earnings is pegged at 38 cents against a loss of $1.12 incurred in the year-ago quarter. Notably, estimates were revised downward over the past 30 days. For quarterly sales, the consensus mark stands at $880.5 million, indicating growth of 14.9% from the year-ago quarter figure.

Spectrum Brands Holdings Inc. Price and EPS Surprise

Spectrum Brands Holdings Inc. Price and EPS Surprise | Spectrum Brands Holdings Inc. Quote

Let's see how things are shaping up for this announcement.

Factors at Play

Spectrum Brands’ strategic efforts to manage business portfolio via mergers, acquisitions and divestitures are encouraging and expected to drive second-quarter results. Recently, the company announced a five-year partnership with Manchester United plc, following which its Remington personal care brand will be the Manchester Football Club’s foremost official Electrical Styling Partner. This deal is expected to help reinforce its Home & Personal Care segment besides making product innovation and marketing efforts. In January 2019, the company completed the divestitures of its Global Auto Care business as well as Global Battery and Lighting Businesses.

Furthermore, management remains on track to execute actions like debt reduction to materially improve capital structure. The company is also set to concentrate on the development of its four key business segments. Meanwhile, Spectrum Brands is likely to gain from its robust and diversified brand portfolio.

However, lower volumes, input cost inflation, unfavorable product mix and operating expense deleverage have been hurting the company’s EBITDA. Going ahead, management expects increased spending on marketing and advertising as well as product developments and innovations to persistently hurt margins. Meanwhile, adverse foreign currency translations have been weighing on the company’s performance. These factors might prove detrimental to the company’s results in the quarter to be reported.

Zacks Model

Our proven model does not conclusively show that Spectrum Brands is likely to beat earnings estimates in second-quarter fiscal 2019. 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. Meanwhile, stocks with a Zacks Rank #4 (Sell) or 5 (Strong Sell) are best avoided. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Spectrum Brands has a Zacks Rank #3 but its Earnings ESP of -4.00% makes surprise prediction difficult.

Stocks Poised to Beat Earnings Estimates

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

lululemon athletica inc. LULU has an Earnings ESP of +0.51 and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Ross Stores, Inc. ROST has an Earnings ESP of +2.20% and a Zacks Rank #3.

American Woodmark Corporation AMWD has an Earnings ESP of +0.27% and a Zacks Rank #3.

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