The Forecast for Q3 Results
Culp, Inc. (CULP) is set to release its third-quarter fiscal 2024 results on March 6, after the market closes. The previous quarter saw the company surpassing the Zacks Consensus Estimate for earnings and net sales by 5% and 1.6% respectively, with an 80.4% and 0.6% year-over-year increase in metrics. Impressively, CULP has consistently outperformed earnings expectations in the past four quarters with an average positive surprise of 15%.
Insights into Estimate Revision
Recent estimates project an earnings per share of a 16-cent loss for the upcoming quarter, signaling a notable 76.5% improvement from the same period last year. Furthermore, the consensus estimate for net sales is anticipated to climb to $59 million, reflecting a robust 12.3% surge from the previous year.
Focusing on Key Factors
The third-quarter net sales for Culp are expected to shine due to its strong market position, inventive product lineup, and unique designs. The company’s robust global manufacturing and sourcing framework, coupled with sound financial management and skilled leadership, are likely to bolster its performance in the forthcoming quarter. Despite challenges in the domestic mattress and residential home furnishings sectors, Culp remains optimistic about its operating improvement trajectory.
Moreover, the company aims to achieve a positive adjusted EBITDA in Q3 and forecasts an operating loss within the range of $1.2-$1.6 million. These projections represent a substantial improvement from the previous year’s operating loss of $7.8 million, driven by enhanced operational efficiencies and cost reductions. However, hurdles in the upholstery fabrics segment due to prevailing macroeconomic conditions may pose a challenge.
Insight from the Zacks Model
While the Zacks model does not definitively predict an earnings beat for Culp this quarter, indicating the need for a positive Earnings ESP and a Zacks Rank of 1, 2, or 3 for such an outcome, the company currently holds an Earnings ESP of 0.00% and a Zacks Rank of #4 (Sell).
Comparative Industry Performances
Additionally, recent reports from Norwegian Cruise Line Holdings Ltd. (NCLH), JAKKS Pacific, Inc. (JAKK), and Strategic Education, Inc. (STRA) highlight varied results in the consumer discretionary sector, showcasing an array of challenges and successes within the industry.
Investors are advised to track Culp’s upcoming earnings report closely and stay attuned to its market performance post-release.
