American Outdoor Brands, Inc. AOUT is scheduled to report third-quarter fiscal 2025 results on Thursday after the closing bell. AOUT delivered a trailing four-quarter average earnings surprise of 70.6%. In the last reported quarter, the company’s bottom line surpassed the Zacks Consensus Estimate by a margin of 68.2%.

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The Zacks Consensus Estimate for third-quarter fiscal 2025 revenues is pegged at $56.4 million, indicating a 5.6% gain from the prior-year period's level. Meanwhile, earnings are expected to be 14 cents per share, implying 75% year-over-year growth. The consensus estimate for earnings has remained stable in the past 60 days.

Factors to Note Ahead of AOUT’s Q3 Results

The company's quarterly results are likely to be aided by its strong focus on product innovation and expanding distribution. AOUT's consistent pipeline of new products, modernized merchandising and cross-category innovation position it as a reliable partner for retailers. This strategy is likely to have driven growth and retail partnerships.

The company’s focus on the three key drivers for its innovation strategy bodes well. First, its evergreen pipeline of breakthrough products not only excites consumers but also addresses retailers' need for traffic-driving solutions, with some of its most revolutionary offerings yet to come. Second, it has modernized and rebranded key labels like BUBBA, Caldwell and BOG, featuring updated logos, sleek packaging and impactful displays that command attention on retail shelves. Third, AOUT positions itself as a cross-category innovation partner, offering retailers a diverse portfolio of high-quality and innovative brands.

Growth across all sales channels, including traditional retail, e-commerce, domestic and international markets, is likely to have aided the company’s top line.

However, on its early September earnings call, management indicated that gross margins for the second half of fiscal 2025 are expected to decline compared with the first two quarters. This anticipated reduction is primarily attributed to higher amortization costs tied to tariff and freight variances from increased inventory purchases in the first half of the year. Additionally, the impact of postponed second-quarter fiscal 2025 promotions, which are expected to take effect later in the year, is likely to have further hurt margins. Consequently, the company anticipates gross margins for the third quarter of fiscal 2025 to be around 45%.

What Our Model Says About AOUT

Our proven model does not conclusively predict an earnings beat for American Outdoor this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is not the case here.

AOUT’s Earnings ESP: AOUT has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

AOUT’s Zacks Rank: AOUT carries a Zacks Rank #3 at present.

Other Stocks to Consider

Here we present three stocks you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this reporting cycle.

Vail Resorts

Vail Resorts, Inc. MTN currently has an Earnings ESP of +1.64% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

MTN’s earnings for the to-be-reported quarter are expected to increase 9.2%. Shares of the company have declined 15.3% in the past six months.

Nike

NIKE, Inc. NKE has an Earnings ESP of +1.43% and a Zacks Rank of 3 at present.

NKE reported better-than-expected earnings in each of the trailing four quarters, the average surprise being 29.8%.

Lululemon Athletica

Lululemon Athletica Inc. LULU currently has an Earnings ESP of +0.29% and a Zacks Rank of 2.

LULU’s earnings for the to-be-reported quarter are expected to increase 10.2%. It reported better-than-expected earnings in each of the trailing four quarters, the average surprise being 6.7%.

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American Outdoor Brands, Inc. (AOUT) : Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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