Designer Brands (DBI) posted quarterly earnings of $0.48 per share, beating Zacks’ consensus estimate of $0.23 per share. That compares to earnings of $0.12 per share a year ago. These figures are adjusted for non-recurring items.
This quarterly report represents a profit surprise of 108.70%. A quarter ago, this footwear and accessories retailer was expected to post earnings of $0.14 per share when it was actually earning $0.15, delivering a surprise of 7.14%.
In the past four quarters, the company has exceeded consensus EPS estimates four times.
The sustainability of the immediate stock price movement based on recently released numbers and future earnings forecasts will primarily depend on management’s comments on the earnings call.
Designer brand stocks are up about 9.2% year-to-date compared to the -14% decline in the S&P 500.
What’s next for designer brands?
With Designer Brands outperforming the market so far this year, the question on investors’ minds is: what’s next for the stock?
There are no easy answers to this key question, but one reliable metric that can help investors answer it is the company’s earnings outlook. This includes not only the current consensus earnings expectations for the upcoming quarter(s), but also how those expectations have changed recently.
Empirical research shows a strong correlation between short-term stock movements and trends in earnings estimate revisions. Investors can track these revisions on their own or rely on a proven scoring tool like Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.
Upstream of this publication of the results, the trend of revisions to estimates for designer brands is favourable. While the magnitude and direction of estimate revisions may change following the release of the company’s earnings report, the current situation results in a Zacks No. 2 (buy) ranking for the stock. Thus, stocks are expected to outperform the market in the near future. You can see the full list of today’s Zacks #1 Rank (Strong Buy) stocks here.
It will be interesting to see how the estimates for the next few quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.55 on $839.62 million in revenue for the upcoming quarter and $1.85 on $3.4 billion in revenue for the current fiscal year.
Investors should be aware that the outlook for the sector can also have a significant impact on stock performance. In terms of Zacks industry rankings, retail – apparel and footwear currently sits in the bottom 14% of Zacks over 250 industries. Our research shows that the top 50% of industries ranked by Zacks outperform the bottom 50% by a factor of more than 2 to 1.
Another security in the same sector, Stitch Fix (SFIX), has not yet published its results for the quarter ended April 2022. The results are expected to be published on June 9.
This online clothing styling service is expected to post a quarterly loss of $0.57 per share in its upcoming report, representing a year-over-year change of -216.7%. The consensus EPS estimate for the quarter remained unchanged for the past 30 days.
Stitch Fix revenue is expected to be $491.71 million, down 8.2% from the prior year quarter.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.