Can Michael Kors (KORS) Keep the Earnings Streak Alive?
We expect Michael Kors Holdings Limited (KORS), the designer, marketer and retailer of branded women’s apparel and accessories, and men’s apparel, to beat expectations when it reports second-quarter fiscal 2015 results on Nov 4. In the last quarter, it had delivered a positive earnings surprise of 12.4%. Let’s see how things are shaping up for this announcement.
Why a Likely Positive Surprise?
Our proven model shows that Michael Kors is likely to beat earnings estimates this quarter. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. Michael Kors has the right combination of two key components.
Zacks ESP: Michael Kors currently has an Earnings ESP of +1.14%. This is because the Most Accurate estimate stands at 89 cents, while the Zacks Consensus Estimate is pegged at 88 cents.
Zacks Rank: Michael Kors carries a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1, 2 or 3 have a significantly higher chance of beating earnings estimates. Conversely, the Sell-rated stocks (Rank #4 and 5) should never be considered going into an earnings announcement.
Michael Kors’ Zacks Rank #3 and ESP of +1.14% make us reasonably confident of a positive earnings beat.
What is Driving the Better-than-Expected Earnings?
Michael Kors’ product diversification strategy, store-expansion drive and foray into international markets are its strengths that make us optimistic about a positive earnings surprise. The company has been constantly deploying capital to open new stores, build new shop-in-shops and has invested heavily to upgrade its information system and distribution infrastructure.
Stocks that Warrant a Look
Here are some companies you may want to consider as our model shows that these have the right combination of elements:
L Brands, Inc. (LB) has an Earnings ESP of +6.25% and a Zacks Rank #2 (Buy).
The Walt Disney Company (DIS) has an Earnings ESP of +3.41% and a Zacks Rank #2.
Dean Foods Company (DF) has an Earnings ESP of +15.39% and a Zacks Rank #3.
Read the Full Research Report on KORS
Read the Full Research Report on DF
Read the Full Research Report on DIS
Read the Full Research Report on LB
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