Culp, Inc. (CULP) Reports Q4 Loss, Lower Revenue Estimates

Culp, Inc. (CULP) reported quarterly loss of $0.39 per share versus the Zacks Consensus Estimate of a loss of $0.44. This compares to a loss of $0.38 per share a year ago. These figures are adjusted for one-time items.

This quarterly report presented an earnings surprise of 11.36%. A quarter ago, it was expected that this company would post a loss of $0.16 per share when in fact it produced a loss of $0.26, delivering a surprise of -62.50%.

The company has topped consensus earnings per share estimates three times over the last four quarters.

Culp, which belongs to the Zacks Textile – Home Furnishing industry, posted revenues of $49.53 million for the quarter ended April 2024, missing the Zacks Consensus Estimate by 0.47%. This compares to revenues of $61.43 million in the year-ago period. The company has surpassed the consensus revenue estimate twice over the last four quarters.

The sustainability of the immediate share price movement based on the recently-released numbers and future earnings expectations will mostly depend on management’s commentary on the earnings call.

Culp shares have lost about 23.7% since the beginning of the year compared to the S&P 500’s gain of 14.9%.

What’s next for Culp?

While Culp has underperformed the market this year, the question that comes to investors’ minds is: what’s next for the stock?

There are no easy answers to this key question, but one reliable indicator that can help investors address this is the company’s earnings outlook. This includes not only the current consensus earnings expectations for the coming quarter(s), but also how those expectations have changed recently.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Ahead of the earnings release, Culp is seeing a mixed estimate revision trend. While the magnitude and direction of estimate revisions could change following the company’s upcoming earnings report, the current status is consistent with a Zacks Rank of #3 (Hold) for the stock. As such, the stock is expected to perform in line with the market in the near term. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the coming days. The current consensus EPS estimate is -$0.21 on revenue of $52.95 million for the coming quarter and -$0.03 on revenue of $225.1 million for the current fiscal year.

Investors should be aware that the outlook for an industry can also have a significant impact on stock prices. In terms of the Zacks Industry Rank, Textiles & Home Furnishings currently ranks in the top 39% of the 250+ Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

Another company in the same industry, Mohawk Industries (MHK), is yet to report earnings for the quarter ending June 2024.

The flooring manufacturer is expected to report quarterly earnings of $2.75 per share in its upcoming report, which would represent a year-over-year change of -0.4%. The consensus earnings per share estimate for the quarter remained unchanged over the past 30 days.

Mohawk Industries’ revenue is expected to be $2.84 billion, down 3.6% from the prior-year quarter.

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