Can Castle Brands (ROX) Pull A Surprise In Q1 Earnings?
Zacks Investment Research | Aug 07, 2017 12:33AM ET
Castle Brands Inc. (NYSE:ROX) is expected to report first-quarter fiscal 2018 results on Aug 8. Last quarter, the company reported in-line results.
Let’s see how things are shaping up for this announcement.
Factors to Consider
In March, Castle Brands made a strategic investment for an additional 20.1% stake in its affiliate Gosling-Castle Partners Inc. or GCP. Castle Brands has now beefed up its ownership in GCP to 80.1% and extended the terms of the agreement through Mar 2030, with 10-year renewal terms from then on. Sales of Goslings Rum and Beer have increased in the U.S. and internationally since the formation of GCP in 2005. Now, with the increase in ownership, Castle Brands’ strong sales and marketing initiatives are expected to boost Goslings Rum and Beer sales. This will help expand Castle Brands consumer base, thus driving profits.
Castle Brands is also poised to benefit from the National Supply Agreement with Walmart (NYSE:WMT) to supply Goslings Stormy Ginger Beer and Goslings Stormy Diet Ginger Beer to all Walmart stores in the U.S. This fortifies Castle Brands’ position in the U.S. market.
For fiscal 2017, Castle Brands net sales increased 7% year over year, driven by solid improvement in Jefferson's bourbons and Goslings Stormy Ginger Beer. This solid momentum is expected to continue in the first quarter of 2018. Notably, the Zacks Consensus Estimate for revenues is pegged at $18.18 million, implying an 8.5% increase.
Earnings Whisper
Our proven model does not conclusively show that Castle Brands is likely to beat earnings this quarter. That is because a stock needs to have both a positive Zacks Investment Research
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