Helen of Troy (HELE) Queued for Q4 Earnings: Factors to Note

Zacks Equity Research
·4-min read

Helen of Troy Limited HELE is likely to witness year-over-year growth in the top line, when it reports fourth-quarter fiscal 2021 numbers on Apr 28. The Zacks Consensus Estimate for revenues is pegged at $496 million, which suggests growth of 12.2% from the figure reported in the prior-year quarter.

The Zacks Consensus Estimate for the bottom line has remained stable in the past 30 days at $1.56 per share, which however indicates a decline of 17% from the year-ago quarter’s reported figure. Notably, this designer, developer, importer, marketer and distributor of a portfolio of consumer products has a trailing four-quarter earnings surprise of 38.4%, on average.

Key Factors to Note

On its third-quarter earnings call, Helen of Troy provided an optimistic view for fiscal 2021 on assumptions that the growth trends witnessed during the fiscal second and third quarters will persist through the fourth quarter as well. The company expects net sales for fiscal 2021 in the bracket of $2.075-$2.1 billion, which indicates growth of 21.5-23.0%. In the Housewares segment, management expects sales growth of 12-12.5%. Sales in the Health & Home unit are expected to have risen 27.5-30%. In the Beauty segment, the company anticipated sales growth of 27-28%. We believe these factors bode well for the quarter under review as well. Additionally, management expects adjusted earnings of $11.50-$11.70 per share for fiscal 2021. The company’s outlook for the fiscal is based on the assumption that the COVID-led demand trends will continue.

Helen of Troy Limited Price, Consensus and EPS Surprise

Helen of Troy Limited Price, Consensus and EPS Surprise
Helen of Troy Limited Price, Consensus and EPS Surprise

Helen of Troy Limited price-consensus-eps-surprise-chart | Helen of Troy Limited Quote

Markedly, Helen of Troy has been gaining on consistent online sales and digital marketing efforts. Notably, online sales advanced nearly 34% year over year in the third quarter of fiscal 2021 and contributed roughly 24% to the company’s top line. Management remains on track to make continued investments in this arena, in an attempt to keep pace with the evolving consumer environment. Further, Helen of Troy is focused on investing in key growth areas like direct-to-consumer channels, new product development, customization, marketing and next-gen distribution infrastructure, among others.

Apart from these, the company’s Leadership Brands have been yielding results. The company’s constant investments in these brands that are considered most productive have been delivering robust results. The company made another move in this direction when it acquired Drybar Products in January 2020. Drybar Products, which marks its eighth Leadership Brand, is yielding results and contributed to the top line in third-quarter fiscal 2021, which benefited from strength in Beauty and Health & Home segments.

That being said, higher marketing, freight and distribution expenses as well as adverse product mix in the Housewares unit weighed on the adjusted operating margin in the last reported quarter. Moreover, increased royalty expenses, elevated legal and other professional fees and higher bad debt expenses were a drag. Persistence of any such headwind is a threat.

What the Zacks Model Unveils

Our proven model doesn’t conclusively predict an earnings beat for Helen of Troy 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. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Helen of Troy currently has a Zacks Rank #3 and an 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 this season.

Medifast MED has an Earnings ESP of +6.25% and a Zacks Rank #3, currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Monster Beverage Corporation MNST has an Earnings ESP of +0.41% and a Zacks Rank #3, at present.

Archer Daniels Midland Company ADM currently has an Earnings ESP of +2.30% and a Zacks Rank #3.

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