Jeff,
I enjoy reading your posts. I think your analysis is dead on, but I'm not as sure as you about upgrades unless the estimates are beaten soundly (something that would be nice, but that I don't expect). The recent oo price rise started after Gruntel and Merrill reported that they expected Oakley to make the .14-.15 estimate. The original estimate had been .22, but was lowered after the poor first quarter was announced. If oo doesn't reach this lower target, the stock will get hammered. The '96 .22 (or was it .23?) second quarter earnings were boosted by enormous Sunglass Hut orders in anticipation of (1)Sunglass Hut's expansion and (2)the Olympics. The absence of these factors are bound to be a drag on the comp. Also, core product sales (jackets and wires) have been reportedly cooling.
I do however assume that the analysts confirmed that oo would make the .14 AFTER getting a pretty good read on what Sunglass Hut orders from oo would be for the quarter. A few factors to consider: (1)The jackets and wires are cooling (they had to know this), (2)the fives are a smash (analysts may have been conservative on sales of a new product, but the issue here is whether oo was able to crank production faster than analyst models, and whether even if cranked, enough fives are being produced to make a bottom line difference), (3)the high priced x-metals still aren't be produced in quantity (did the analysts assume that they would be? -- oo was telling people they expected to reach production of 10,000 a month in May, but it apparently is still closer to 5,000 or 6,000 a month).
One factor that may affect nervous shareholders one way or the other before the earnings report is Sunglass Hut monthly comp figures which seem to be reported between the 5th and 10th of each month.
David |
