Spectrum Brands (SPB) to Report Q2 Earnings: What's in Store?

Spectrum Brands Holdings, Inc. SPB is slated to report second-quarter fiscal 2020 results on Apr 30, before the opening bell. In the last reported quarter, the company delivered a negative earnings surprise of 42.9%. Moreover, its earnings underperformed the Zacks Consensus Estimate by 15%, on average, in the trailing four quarters.

The Zacks Consensus Estimate for fiscal second-quarter earnings has gone down by 2 cents to 33 cents over the past seven days. However, this suggests an increase of nearly 27% from 26 cents reported a year ago. Further, the consensus mark for revenues is pegged at $868.8 million, indicating a decline of 4.2% from the figure reported in the year-ago quarter.

Key Factors to Note

Spectrum Brands has been gaining from its Global Productivity Improvement Plan, which is aimed at improving operating efficiency and effectiveness. This plan is likely to generate cost savings of $100 million, which will be reinvested to drive growth. During the last earnings call, management had stated that this initiative is likely to offset tariff headwinds during the fiscal second quarter. Such endeavors are likely to have benefited the company’s second-quarter performance.

Further, the latest addition of Omega Sea to the company’s Global Pet Care portfolio bodes well for the quarter under review. Earlier, management had anticipated Home & Garden and Hardware & Home Improvement segments to recover during the second quarter. In fact, the Zacks Consensus Estimate for sales in the Global Pet Care and Hardware & Home Improvement segments is pegged at $217 million and $307 million, implying year-over-year growth of 5.3% and 3%, respectively.

However, weakness in margins, stemming from higher tariffs and restructuring costs, acts as a deterrent. Apart from these, unfavorable foreign currency movements are likely to have dented the company’s top line in the quarter under review.

Spectrum Brands Holdings Inc. Price and EPS Surprise

Spectrum Brands Holdings Inc. Price and EPS Surprise

Spectrum Brands Holdings Inc. price-eps-surprise | Spectrum Brands Holdings Inc. Quote

What the Zacks Model Unveils

Our proven model doesn’t conclusively predict an earnings beat for Spectrum Brands 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. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Spectrum Brands carries a Zacks Rank #4 (Sell) and Earnings ESP of 0.00%.

Stocks With Favorable Combinations

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:

DISH Network Corporation DISH currently has an Earnings ESP of +6.60% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Discovery, Inc. DISCA currently has an Earnings ESP of +3.60% and a Zacks Rank #3.

Charter Communication, Inc. CHTR presently has an Earnings ESP of +1.60% and a Zacks Rank #3.

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