Funko, Inc. FNKO to report Second quarter 2022 results on August 4, 2022, after market close. In the most recent quarter under review, the company delivered a 70% earnings surprise.

The trend of estimate revision

The Zacks Consensus estimate for second-quarter earnings is 22 cents per share, down 45% from 40 cents in the year-ago quarter. In terms of revenue, the consensus mark is $299.8 million. The guidance points to a 27% increase from the year-ago quarter.

Let’s take a look at how things played out during the quarter.

Factors to consider

Funko’s second-quarter sales are expected to have benefited from solid demand across product categories, capacity-building efforts, diversification of manufacturing footprint, and international expansion efforts. The broad-based strength across regions, brands and channels bodes well for the company. Solid contributions from the Loungefly brand should have boosted the company’s sales in the second quarter.

Emphasis on direct-to-consumer channels through operational improvements is likely to have boosted the company’s performance in the second quarter. In the previous quarter, DTC channels grew 36% year over year, driven by higher conversion rates. With an increased focus on expanded product offerings, greater use of exclusive products and technology improvements, the momentum should have continued in the second quarter.

However, disruptions in the supply chain are likely to have impacted the company’s performance in the second quarter. An increase in freight costs is also likely to have impacted margins in the quarter.

What our model says

Our proven

The model doesn’t predict a win hit for Funko this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the chances of an Earnings Beat. But that is not the case here.

Earnings ESP: Funko has an Earnings ESP of -5.27%. You can discover the best stocks to buy or sell…