Collective Brands Earnings Preview

Investors braced for a bumpy ride ahead of Collective Brands' (NYSE: PSS  ) earnings announcement as the company has wavered between beating and falling short of analyst predictions during the past fiscal year. The company will unveil its latest earnings on Monday, Nov.21. Collective Brands, through its subsidiaries, is engaged in the wholesale and retail sale of footwear and related accessories worldwide.

What analysts say:

  • Buy, sell, or hold?: The majority of analysts back Collective Brands as a buy. But with 62.5% of analysts rating it a buy, Collective Brands is still below the mean analyst rating of its nearest eight competitors, which average 77.3% buys. Analysts don't like Collective Brands as much as competitor Finish Line overall. Eight out of eight analysts rate Finish Line a buy compared to five out of eight for Collective Brands. Wall Street has warmed to the stock over the past three months, with analysts increasing their endorsement from hold to moderate buy.
  • Revenue forecasts: On average, analysts predict $908.1 million in revenue this quarter. That would represent a rise of 3% from the year-ago quarter.
  • Wall Street earnings expectations: The average analyst estimate is earnings of $0.53 per share. Estimates range from $0.43 to $0.64.

What our community says:
CAPS All-Stars are solidly behind the stock, with 97.9% awarding it an outperform rating. The community at large agrees with the All-Stars, with 89.2% granting it a rating of outperform. Fools are keen on Collective Brands, though the message boards have been quiet lately, with only 96 posts in the past 30 days. Though still bullish, the CAPS rating of four out of five stars for Collective Brands is a bit more pessimistic than the community assessment.

Management:
The company's gross margin shrank by 10.7 percentage points in the last quarter. Revenue rose 4.9% while cost of sales rose 22% to $673.9 million from a year earlier.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and net margins over the past four quarters.

Quarter

Q2

Q1

Q4

Q3

Gross Margin

23.6%

35.7%

31.8%

37.3%

Operating Margin

(7.1%)

4.9%

0.3%

7.8%

Net Margin

(4%)

3%

(1.3%)

5.4%

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Earnings estimates provided by Zacks.

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