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Will Strategic Efforts Aid Canada Goose's (GOOS) Q3 Earnings?

By Zacks Investment ResearchFeb 10, 2019 09:35PM ET
www.investing.com/analysis/will-strategic-efforts-aid-canada-gooses-goos-q3-earnings-200386317
Will Strategic Efforts Aid Canada Goose's (GOOS) Q3 Earnings?
By Zacks Investment Research   |  Feb 10, 2019 09:35PM ET
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Canada Goose Holdings Inc. (NYSE:GOOS) is scheduled to report third-quarter fiscal 2019 results on Feb 14, before the opening bell.

The company has an impressive earnings surprise history, having surpassed estimates in the last seven quarters. Also, it delivered an average earnings beat of 83.2% in the trailing four quarters. The Zacks Consensus Estimate for third-quarter earnings is pegged at 57 cents, reflecting 23.9% growth year over year. Notably, estimates remained stable over the past 30 days. For revenues, the consensus mark is pinned at $260 million, mirroring a 24.2% improvement from the year-ago period.

Factors at Play

Canada Goose has been gaining from store-expansion efforts, direct-to-consumer (“DTC”) channel and wholesale business. Currently, the company is progressing well with its retail store opening program for fiscal 2019 besides enhancing its presence in Greater China. Also, it has been significantly investing in the Canadian in-house manufacturing capacity to resonate well with the increasing consumer demand.

Canada Goose’s commitment toward bringing latest and exclusive merchandising offerings is an added positive. Furthermore, it remains encouraged about the buyout of Baffin — the leading footwear designer and manufacturer.

Management also remains confident of delivering solid results going ahead, backed by robust first-half fiscal 2019 results as well as strong sales growth in both the wholesale and DTC businesses. For the fiscal year, management projects wholesale revenues to grow high-single-digits, making investors optimistic about the fiscal third-quarter results.

However, the company has been persistently witnessing higher expenses, which might dent margins. In the last reported quarter, selling, general and administrative expenses rose 63.7%. Higher cost of investments toward marketing, corporate headcount as well as e-commerce expansion also remain a concern for the fiscal third quarter.

What the Zacks Model Unveils

Our proven model does not conclusively show that Canada Goose is likely to beat estimates in third-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. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Canada Goose has a Zacks Rank #3, which increases the predictive power of earnings beat. However, the company’s Earnings ESP of 0.00% makes surprise prediction difficult.

Stocks With Favorable Combination

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

Chico's FAS, Inc. (NYSE:CHS) has an Earnings ESP of +16.67% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Tilly's, Inc. (NYSE:TLYS) has an Earnings ESP of +0.33% and a Zacks Rank #2.

PVH Corp. (NYSE:PVH) has an Earnings ESP of +1.31% and a Zacks Rank #3.

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Tilly's, Inc. (TLYS): Free Stock Analysis Report

Canada Goose Holdings Inc. (GOOS): Free Stock Analysis Report

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Original post
Will Strategic Efforts Aid Canada Goose's (GOOS) Q3 Earnings?
 
Will Strategic Efforts Aid Canada Goose's (GOOS) Q3 Earnings?

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