Columbia sportswear

Columbia Sportswear (COLM) Profits Expected to Increase: Should You Buy?


TThe market expects Columbia Sportswear (COLM) to post an increase in year-over-year profits on higher revenues when it releases its results for the quarter ended September 2021. This prospect of broad consensus known is important in assessing a company’s earnings position, but a powerful factor that could influence its stock price in the short term is how actual results compare to those estimates.

The action could rise if these key figures exceed expectations for the next earnings report, which is expected to be released on October 28. On the other hand, if they are missing, the action might drop.

While the sustainability of the immediate price change and future profit expectations will depend primarily on management’s discussion of trading conditions when calling profits, it is worth crippling the likelihood of a positive surprise from the market. BPA.

Zacks consensus estimate

The outdoor equipment maker is expected to post quarterly earnings of $ 1.31 per share in its next report, which represents a year-over-year change of + 39.4%.

Revenue is expected to reach $ 867.95 million, up 23.8% from the prior year quarter.

Trend of estimated revisions

The consensus EPS estimate for the quarter has been revised down 2.61% in the past 30 days to the current level. This essentially reflects how hedge analysts collectively reassessed their initial estimates during this time period.

Investors should be aware that the direction of revisions to estimates by individual coverage analysts may not always be reflected in the overall change.

Price, consensus and EPS Surprise

Whisper of gains

Revisions to estimates before a company’s earnings are released provide clues to business conditions for the period in which the results are released. Our exclusive surprise prediction model – the Zacks ESP on earnings (Surprise Prediction Expected) – has this idea at its core.

Zacks Earnings ESP compares the most accurate estimate to Zacks’ consensus estimate for the quarter; most accurate estimate is a more recent version of the Zacks Consensus EPS estimate. The idea here is that analysts who revise their estimates just before the results are released have the latest information, which could potentially be more accurate than they and other consensus contributors predicted earlier.

Thus, a positive or negative ESP reading of earnings theoretically indicates the likely deviation of actual earnings from the consensus estimate. However, the predictive power of the model is only significant for positive ESP readings.

A positive ESP on earnings is a good predictor of a pace of earnings, especially when combined with a Zacks # 1 (strong buy), 2 (buy), or 3 (hold) ranking. Our research shows that actions with this combination produce a positive surprise almost 70% of the time, and a solid Zacks ranking actually increases the predictive power of ESP earnings.

Please note that a negative ESP reading of earnings is not indicative of a shortfall. Our research shows that it is difficult to predict an increase in earnings with any degree of confidence for stocks with negative earnings ESP readings and / or a Zacks ranking of 4 (sell) or 5 (strong sell).

How have the numbers evolved for Columbia Sportswear?

For Columbia Sportswear, the most accurate estimate is the same as Zacks’ consensus estimate, suggesting that there are no recent analyst opinions that differ from what was considered to be derived. consensus estimation. This resulted in an ESP on earnings of 0%.

On the flip side, the action currently carries a Zacks rank of # 4.

Thus, this combination makes it difficult to conclusively predict that Columbia Sportswear will beat the consensus EPS estimate.

Does the history of earnings surprises contain a clue?

Analysts often look at how well a company has been able to match consensus estimates in the past while calculating their estimates for future profits. So it’s worth taking a look at the surprise history to gauge its influence on the upcoming issue.

For the last published quarter, Columbia Sportswear was expected to post a loss of $ 0.12 per share when it actually made a profit of $ 0.61, delivering a surprise of + 608.33% .

In the past four quarters, the company has beaten consensus EPS estimates three times.

Final result

A gain or failure of gains may not be the only basis for a stock to move higher or lower. Many stocks end up losing ground despite declining earnings due to other factors that disappoint investors. Likewise, unforeseen catalysts help a number of stocks win despite a shortfall.

That said, betting on stocks that are expected to exceed profit expectations increases the chances of success. That’s why it’s worth checking out a company’s ESP results and Zacks rankings before it’s released quarterly. Make sure to use our ESP Income Filter to discover the best stocks to buy or sell before they are published.

Columbia Sportswear does not appear to be a compelling candidate in terms of earnings. However, investors should also pay attention to other factors when betting on this stock or staying on the sidelines before its results are released.

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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.