Esprit Holdings (0330 HK) reported sharply lower earnings last Friday, closing down nearly 19% on a day that the Hang Seng closed up 1.4%. Earnings of HK$1.825 were significantly lower than the consensus of HK$2.450, which was correctly anticipated by the StarMine SmartEstimate, which had been warning of a likely negative surprise for several months.
In the accompanying chart, note the purple line, which shows the percentage difference between the consensus and SmartEstimate. The gold line shows the consensus, and the black bars the reported earnings. As you’ll see, Esprit missed their number in each of the past three years, and the SmartEstimate accurately anticipated these misses each time.
So, after the stock price plunge and with the company closing its US business, is now a good time to get into Esprit? Not according to StarMine’s momentum indicators. StarMine’s quantitatively-derived measures of analyst revisions and price momentum score the stock with a relative ranking of 1 out of 100. Analysts have revised EPS and EBITDA estimates downward by 90% and 77% respectively for FY Jun-12, and further downward revisions are likely in the future.
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