What Investors Are Looking For From Fossil On Tuesday

May.12.14 | About: Fossil, Inc. (FOSL)

Fossil Inc. (NASDAQ:FOSL) is set to report FQ1 2014 earnings after the market closes on Tuesday, May 13th. Fossil is an American designer and manufacturer best known for creating watches, jewelry, clothing and other high end accessories. Shares of Fossil were up significantly after posting strong earnings back in February. However, since the start of the year Fossil stock has fallen a total of 4%. This quarter Wall Street expects Fossil's earnings to fall by 2 cents per share compared to FQ1 of last year and for revenue to grow by 14% year over year. Here's what investors are expecting Fossil to report on Tuesday.

The information below is derived from data submitted to the Estimize.com platform by a set of Buy Side and Independent analyst contributors.

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(Click here to see Estimates and Interactive Features for Fossil)

The current Wall Street consensus expectation is for Fossil to report $1.19 EPS and $773.87M revenue while the current Estimize.com consensus from 11 Buy Side and Independent contributing analysts is $1.28 EPS and $779.43M in revenue. This quarter the buy-side as represented by the Estimize.com community is expecting Fossil to beat Wall Street's expectations by a considerable margin on profit and a small difference in sales.

Over the previous six quarters the consensus from Estimize.com has been more accurate than Wall Street in forecasting Fossil's EPS and revenue five times each. By tapping into a wider range of contributors including hedge fund analysts, asset managers, independent research shops, students and non professional investors Estimize has created a data set that is more accurate than Wall Street up to 69.5% of the time.

The magnitude of the difference between the Wall Street and Estimize consensus numbers often identifies opportunities to take advantage of expectations that may not have been priced into the market. In this case we are seeing a larger than usual differential between the earnings expectations from Wall Street and Estimize.

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The distribution of estimates published by analysts on the Estimize.com platform range from $1.19 to $1.38 EPS and from $763.33M to $796.00M in revenues. This quarter we're seeing a moderate to wide range of estimates on Fossil compared to previous quarters.

The size of the distribution of estimates relative to previous quarters often signals whether or not the market is confident that it has priced in the expected earnings already. A wide distribution of estimates signals less agreement in the market, which could mean greater volatility post earnings.

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Throughout the quarter the Wall Street EPS consensus fell from a high of $1.30 to $1.19 while the Estimize consensus decreased from $1.35 to $1.28. Meanwhile Wall Street raised its revenue consensus from $764.17M to $773.87M while the Estimize consensus rose from a low of $775.98M to $779.43M at the end of the quarter. Timeliness is correlated with upward analyst revisions from the Estimize community, and leading into the report are often a bullish indicator. Click to enlarge

The analyst with the highest estimate confidence rating this quarter is nano who projects $1.32 EPS and $784.87M in revenue. nano is ranked 452nd overall among over 4,450 contributing analysts. Over the past two years nano has been more accurate than Wall Street in forecasting EPS and revenue 47% and 60% of the time, respectively, throughout 15 estimates.

Estimate confidence ratings are calculated through algorithms developed by deep quantitative research which looks at correlations between analyst track records and tendencies as they relate to future accuracy. In this case nano is making a bullish call expecting Fossil to beat the expectations from the Estimize community on both profit and sales.

On Friday peer Ralph Lauren posted a better than expected quarter but warned that the luxury goods and accessories sector that Fossil is a part of may face a profit margin squeeze in the near future. Contributing analysts on the Estimize.com platform expect Fossil to beat Wall Street's earnings expectations by 9 cents per share but will also be looking for a brighter outlook than the one given by Ralph Lauren.

Disclosure: None.