April 30, 2017

StarMine Models Pick North American Companies for 17Q1 Earnings Misses

by David Aurelio

The StarMine team has selected five U.S. companies, using the Eikon Screener, that we expect to miss earnings estimates, based on SmartEstimate® and Predicted Surprise data.

SmartEstimates® aim to provide earnings forecasts that are more accurate than I/B/E/S Consensus Estimates, by putting more weight on the recent forecasts of top-rated analysts. When SmartEstimates® diverge significantly from Consensus, you can anticipate the occurrence of earnings surprises with an accuracy rate of 70%. Revenue SmartEstimates® are even more predictive of surprises, with a historical accuracy rate of 78%.

North American 17Q1 Negative Surprise PredictionsOn average (since 1994), 64% of S&P 500 companies beat estimates, while 21% miss. Our North American Predicted Surprise selections have consistently outperformed. Since 2011 Q4, the running total for correctly calling North American positive surprises is 80% and 66% for calls on negative surprises, which results in a combined accuracy of 73%. Our 2016 Q4 positive surprise predictions were 100% accurate while the negative surprises correctly called 60% of the companies selected to report earnings below the mean at the time of the report. As a result, the combined predictions for 2016 Q4 were 80% correct. The 2016 Q4 Predicted Surprise results can be viewed here.

SunPower Corp. 17Q1 EPS Estimate History

SunPower Corp. (SPWR.O)

SunPower delivers complete solar solutions to residential, commercial, and power plant customers. Pricing pressures as well and other industry headwinds are expected to pressure gross margins in 17Q1. This solar provider has a negative EPS Predicted Surprise of -12.8% for the quarter, which is based on a SmartEstimates® of -$0.51 per share and a mean estimate of -$0.57 per share.

Tailored Brands, Inc. 17Q1 EPS Estimate History

Sources: Thomson Reuters Eikon, Thomson Reuters StarMine

Tailored Brands, Inc. (TLRD.N)

Men’s apparel retailer Tailored Brands, Inc. is the holding company of Men’s Wearhouse, which includes Jos. A. Bank, among other brands. Same store sales (SSS) for the quarter are expected to decline by 1.87%. The  2017 Q1 SSS declines are driven by K&G and Moores, which are expected to fall 3.25% and 2.25%, respectively. Tailored has a 17Q1 EPS negative Predicted Surprise of -18.2% based on a SmartEstimate® of $0.18 per share compared to the mean estimate of $0.23 per share.

Dexcom, Inc. 17Q1 EPS Estimate History

Sources: Thomson Reuters Eikon, Thomson Reuters StarMine

Dexcom, Inc. (DXCM.O) 

Medical equipment, supplies, and distribution company Dexcom, Inc. is focused on the design, development and commercialization of continuous glucose monitoring (CGM) systems for ambulatory use by people with diabetes and for use by healthcare providers.

Analysts expect Dexcom to be impacted by higher costs. Over the past 30 days, analysts have made an average upward revision of 17.6% to 2017 Q1 SG&A expense estimates. As a result, there is a Predicted Surprise for SG&A expense of 2.1%, which is based on a SmartEstimate® of $98.91 million and mean estimate of $96.88 million. Expectations for higher expenses translate to a Predicted Surprise of -7.9% for 17Q1 EPS, which is based on a SmartEstimate® of -$0.63 per share compared to a mean estimate of -$0.50 per share. Additionally, there is a Bold Estimates for 17Q1 EPS of -$0.63 per share. A Bold Estimate represents an estimate by a five-star-rated analyst (the highest possible rating) by StarMine for past accuracy. These Predicted Surprises, along with the Bold Estimate, indicate a high probability that Dexcom will report earnings below the mean EPS estimate for 17Q1.

Abercrombie & Fitch Co. 17Q1 EPS Estimate History

Sources: Thomson Reuters Eikon, Thomson Reuters StarMine

Abercrombie & Fitch Co. (ANF.N)

Specialty retailer Abercrombie & Fitch Co. is expected to face multiple headwinds in 2017 Q1 that include industry pressures, unfavorable foreign exchange, and declining same store sales. The company is expected to see 17Q1 SSS decline by 3.45%, with the Abercrombie & Fitch brand expected to decline 7.2% and Hollister brand expected to increase 0.83%. In anticipation of these headwinds, analysts have made an average downward revision of 2.7% to 17Q1 EPS estimates over the past 30 days. This translates to a negative Predicted Surprise of -3.3%, based on a mean earnings of -$0.69 per share and a SmartEstimate® of -$0.72 per share.

Seadrill, Ltd. 17Q1 EPS Estimate History

Sources: Thomson Reuters Eikon, Thomson Reuters StarMine

Seadrill, Ltd. (SDRL.N)

Seadrill Limited is an offshore drilling contractor providing drilling services to the oil and gas industry. Analysts expect that Y/Y declines in 17Q1 revenue will outpace declines in cost of goods sold. This had led to downward revisions to 17Q1 gross profit margin (GPM) estimates. As a result, the mean GPM estimate has fallen 1.6 percentage points over the past 30 days to 55.68%. This lower GPM is one of the drivers behind the 17Q1 EPS negative Predicted Surprise of -17.7%, which is based on a SmartEstimates® for a loss of $0.03 per share vs. a mean estimate for a loss of $0.01 per share.  

You can find our North American 17Q1 positive Predicted Surprise candidates here.

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