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American Outdoor Brands (AOBC) Q3 Earnings: What's in Store?

Zacks Equity Research
Updated

American Outdoor Brands Corporation AOBC is scheduled to report third-quarter fiscal 2018 results, after market close on Mar 1.

The gun maker surpassed estimates in three of the last four quarters, with an average positive surprise of 11.89%. Let’s see how things are shaping up for this quarter.

Factors to Consider

Of late, American Outdoor Brands has been experiencing an increase in overall inventory levels. The upside can be attributed to the decline in shipments in the first half of fiscal 2018 combined with an inventory build related to new product introductions. To resolve this issue,, the company took measures to reduce its outsourced manufacturing of firearm parts as well as overall production output levels at certain of its facilities.

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Per management, these initiatives have the capability to reduce the inventory level but such reductions may take time. Meanwhile, in case demand rises, such manufacturing reductions may impact the company’s operating results in the second half of fiscal 2018.

Moreover, according to the FBI's National Instant Criminal Background Check System (NICS), firearm background checks dropped 9.5% year over year in fourth-quarter 2017 (October-December 2017), which indicates a decline in demand. This, in turn, might hurt sales of publicly traded gun manufacturers like American Outdoor Brands.

While, the Zacks Consensus Estimate for American Outdoor Brands’ fiscal third-quarter earnings of 9 cents projects a decline of 86.4%, the same for revenues of $175.3 million hints at a decrease of 24.9% on a year-over-year basis.

American Outdoor Brands Corporation Price and EPS Surprise

American Outdoor Brands Corporation Price and EPS Surprise | American Outdoor Brands Corporation Quote

Earnings Whisper

Our proven model does not conclusively show an earnings beat for American Outdoor Brands this quarter. Notably, a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. However, American Outdoor Brands lacks both these attributes, as mentioned below:

Zacks ESP: The company has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: American Outdoor Brands carries a Zacks Rank #3, which increases the power of surprise prediction. However, a 0.00% Earnings ESP makes surprise prediction difficult.

Meanwhile, we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Recent Peer Releases

Spirit AeroSystems Holdings SPR recorded fourth-quarter 2017 adjusted earnings of $1.32 per share, which surpassed the Zacks Consensus Estimate of $1.22 by 8.2%. The company sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Rockwell Collins COL reported results for first-quarter fiscal 2018 (ended Dec 31, 2017). The company’s adjusted earnings per share of $1.59 outpaced the Zacks Consensus Estimate of $1.53 by 3.9%. The stock carries a Zacks Rank of 3.

Orbital ATK OA posted fourth-quarter 2017 adjusted earnings of $1.77 per share, missing the Zacks Consensus Estimate of $1.84 by 3.8%. The company carries a Zacks Rank #3.

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Rockwell Collins, Inc. (COL) : Free Stock Analysis Report
 
Spirit Aerosystems Holdings, Inc. (SPR) : Free Stock Analysis Report
 
Orbital ATK, Inc. (OA) : Free Stock Analysis Report
 
American Outdoor Brands Corporation (AOBC) : Free Stock Analysis Report
 
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