Things to Keep in Mind Before Sally Beauty's (SBH) Q2 Earnings
Sally Beauty Holdings, Inc. SBH is likely to post a decline in the top and the bottom line when it reports second-quarter fiscal 2021 results on May 6. The Zacks Consensus Estimate for revenues is pegged at $827.7 million, which indicates a decline of almost 5% from the prior-year quarter’s reported figure.
The Zacks Consensus Estimate for earnings has been unchanged at 16 cents per share in the past 30 days. The estimate suggests a decline of 30.4% from the year-ago quarter’s reported figure. This international specialty retailer and distributor of professional beauty supplies has a trailing four-quarter negative earnings surprise of 36.7%, on average.
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 is bearing the brunt of coronavirus-led hurdles like temporary closures and capacity restrictions in some regions. During its last earnings call, management highlighted that nearly 45% of its store locations were going through some level of capacity restriction or closures worldwide. Further, the company notified that it was seeing mandated store closures in Europe, Canada and Latin America as well as capacity restrictions in several domestic markets. Also, capacity restrictions were in place at salons in California. These factors are likely to have affected the company’s sales in the fiscal second quarter.
Apart from these factors, rising SG&A expenses is a concern. In its last earnings call, management highlighted that it expects SG&A dollars to be flat to slightly up on a sequential basis in the fiscal second quarter. This outlook primarily indicates investments in digital marketing in both the segments along with IT spending.
Nevertheless, Sally Beauty is witnessing increased consumer demand on digital platforms amid pandemic-led restrictions. In this regard, the company is undertaking a number of efforts to enhance its digital space like augmenting its delivery options. Moreover, well-chalked endeavors such as focus on Transformation Plan, efforts to enhance customers’ experience and buyouts bode well.
What the Zacks Model Unveils
Our proven model doesn’t 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. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Sally Beauty carries a Zacks Rank #4 (Sell) and an Earnings ESP of 0.00%.
Stocks With Favorable Combinations
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.
Tapestry, Inc. TPR currently has an Earnings ESP of +10.73% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Chuy’s Holdings, Inc. CHUY currently has an Earnings ESP of +9.56% and carries a Zacks Rank #2.
Costco Wholesale Corporation COST currently has an Earnings ESP of +0.91% and carries a Zacks Rank #3.
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