Investors braced for a bumpy ride ahead of Midas' (NYSE: MDS) 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. Midas provides retail automotive services mainly through franchised or licensed shops in the U.S., Canada, Europe, and other countries.

What analysts say:

  • Buy, sell, or hold?: Analysts think investors should stand pat on Midas with analysts unanimously rating it hold. Analysts don't like Midas as much as competitor AutoZone overall. Seven out of 19 analysts rate AutoZone a buy compared to zero of three for Midas. Midas' rating hasn't changed over the past three months.
  • Revenue forecasts: On average, analysts predict $47.4 million in revenue this quarter. That would represent a decline of 3% from the year-ago quarter.
  • Wall Street earnings expectations: The average analyst estimate is earnings of $0.13 per share.

What our community says:
CAPS All-Stars are solidly backing the stock with 81.8% giving it an outperform rating. The majority of the Fools are in agreement with the All-Stars as 72.4% give it an outperform rating. Fools are bullish on Midas, though the message boards have been quiet lately with only 40 posts in the past 30 days. Midas' bearish CAPS rating of two out of five stars falls short of the Fool community sentiment.

Management:
Revenue has fallen in the past two quarters. The company's gross margin shrank by 14.1 percentage points in the last quarter. Revenue fell 3.2% while cost of sales rose 26.9% to $28.3 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

40.7%

38.2%

49.6%

52.5%

Operating Margin

12.6%

10.2%

(43.8%)

8.0%

Net Margin

4.4%

2.0%

(33.7%)

1.6%

One final thing: If you want to keep tabs on Midas movements, and for more analysis on the company, make sure you add it to your watchlist.

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