Will Wolverine (WWW) Miss Earnings Estimates? - Analyst Blog

Wolverine World Wide Inc. WWW, a versatile footwear manufacturer, is slated to post its first-quarter 2014 results on Apr 29, 2014. In the previous quarter, the company delivered a positive earnings surprise of 10%. Let's see how things are shaping up for this announcement.

Factors This Past Quarter

Although Wolverine's fourth-quarter earnings comfortably beat the Zacks Consensus Estimate, it declined year over year. Revenues soared 13.6% to $740.8 million, but fell short of the Zacks Consensus Estimate. Results were primarily driven by the consistently strong performance of its newly-acquired brands.

The surge in the top line also drove the gross profit to rise 18.2% year over year, which in turn facilitated a 150 basis points expansion in gross margin. The improvement reflected an encouraging channel mix, partly offset by higher product costs and foreign exchange contract losses.

Earnings Whispers

Our proven model does not conclusively show that Wolverine is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP (Expected Surprise Prediction) and a Zacks Rank of #1, #2 or #3 for this to happen. This is not the case here as you will see below.

Zacks ESP: Wolverine currently has an Earnings ESP of -3.33%. This is because the Most Accurate estimate stands at 29 cents a share, while the Zacks Consensus Estimate is pegged at 30 cents.

Zacks Rank #4 (Sell): Wolverine's Zacks Rank #4 (Sell) when combined with a negative ESP makes surprise prediction difficult. We caution against stocks with a Zacks Rank #4 and #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

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

Rite Aid Corp. RAD, Earnings ESP of +14.29% and a Zacks Rank #1 (Strong Buy).

The Walt Disney Co. DIS, Earnings ESP of +2.08% and a Zacks Rank #2 (Buy).