The 2024 Q2 earnings season has been positive so far, with results reflecting resilience. Earnings growth is on pace to be positive again, with the trend expected to continue in the coming periods. The Tech sector has been a big contributor, similar to what we’ve seen in previous quarters. Several companies have reported margin expansion, which has provided higher profitability.
Deckers Outdoor DECK, Kimberly-Clark KMB, and Skechers SKX all posted higher margins. All three sport a favorable Zacks Rank, reflecting bullishness among analysts.
The Defensive Nature of Kimberly-Clark
KMB shares carry a defensive nature thanks to their placement in the consumer staples sector. These companies’ products have an advantageous ability to generate consistent demand in various economic situations. The stock sports a Zacks Rank #2 (Buy), with earnings expectations for its current fiscal year rising notably over the last month after a recent guidance upgrade.
Cost management practices have significantly aided the company’s profitability, with adjusted EPS of $1.96 throughout its latest quarter seeing a 20% climb year-over-year. Margin expansion has also kept investors content.
The charts illustrate the company’s profitability on a trailing twelve-month basis.
Deckers Outdoor and Brand Momentum
Continued brand momentum among UGG and Hoka shoes propelled the company to strong results, leading to an upward revision in its current fiscal year outlook. Analysts adjusted their outlook accordingly following the positive results, with a Zacks Consensus EPS estimate suggesting 8% growth year-over-year.
The company has been enjoying margin expansion, which has enhanced its profitability. The gross margin expanded to 56.9% from 51.3% in the year-ago period, showcasing sustained positive performance.
Visual representations of the company’s financial progress are demonstrated in the provided charts.
Skechers and Record Sales
Skechers experienced a record in sales, despite a 7% EPS decline on a 7% sales increase. Both metrics missed relative to Zacks Consensus estimates, breaking a long streak of positive surprises. However, sales of $2.2 billion reflected a quarterly record, with Direct-to-Consumer (DTC) sales increasing by an impressive 9.2% year-over-year.
Margin expansion during the period, along with other operational efficiencies, led to a gross margin improvement of 220 basis points to 54.9%. Positive revisions for its current fiscal year were recorded, signaling a favorable Zacks Rank #2 (Buy) for the stock.
The Profitable Picture
Several companies, including Deckers Outdoor DECK, Kimberly-Clark KMB, and Skechers SKX, have demonstrated higher profitability throughout the Q2 earnings season.
Zacks Investment Research
