Kirkland's Earnings Preview

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Investors are bracing for a bumpy ride ahead of Kirkland's (NAS: KIRK) 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 Friday, August 19. Kirkland's is a retailer of home decor in the United States with operating stores that present a selection of distinctive merchandise, including framed art, mirrors, wall decor, candles, lamps, decorative accessories, and garden accessories.

What analysts say:

  • Buy, sell, or hold?: Analysts think investors should stand pat on Kirkland's with four of five analysts rating it hold. Analysts don't like Kirkland's as much as competitor Pier 1 Imports overall. Five out of eight analysts rate Pier 1 Imports a buy compared to one of five for Kirkland's. Kirkland's rating hasn't changed over the past three months.
  • Revenue forecasts: On average, analysts predict $91.8 million in revenue this quarter. That would represent a rise of 2.6% from the year-ago quarter.
  • Wall Street earnings expectations: The average analyst estimate is earnings of $0.02 per share. Estimates range from $0.01 to $0.03.

What our community says:
CAPS All-Stars are solidly behind the stock with 86.5% assigning it an "outperform" rating. The community at large agrees with the All-Stars, with 83.6% giving it a rating of "outperform." Fools have embraced Kirkland's, though the message boards have been quiet lately with only 64 posts in the past 30 days. Despite the majority sentiment in favor of Kirkland's, the stock has a middling CAPS rating of three out of five stars.

Management:
Kirkland's income has fallen year over year by an average of 37.7% over the past five quarters. The company's gross margin shrank by 3.1 percentage points in the last quarter. Revenue rose 1% while cost of sales rose 6.6% to $56.3 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

Q1

Q4

Q3

Q2

Gross Margin

40.3%

42.3%

38.8%

38.9%

Operating Margin

5.5%

15.9%

4.1%

5.7%

Net Margin

3.4%

10.3%

2.5%

3.6%

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At the time this article was published

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