) is set to report its first-quarter fiscal 2014 results on May
30. In the last quarter, the company posted a positive earnings
surprise of 10.5%. Let's see how things are shaping up for this
Growth Factors this Past Quarter
In the fourth quarter of fiscal 2013, the company's earnings
of 95 cents were at the higher end of the company's guidance
range of 85 cents to 95 cents, but were lower than the year-ago
quarter by 9.5%, primarily due to lower consumer demand and
currency headwinds. Weak business in the licensing segment was
also a dampener.
Moreover, management hinted that international losses could
increase due to higher costs related to incremental marketing
expenses. Macroeconomic headwinds are also expected to adversely
affect comps during the first quarter. Promotional expenses in
North America, currency headwinds and lower mix of royalties are
expected to restrict earnings in the future.
Our proven model does not conclusively show that Guess? is
likely to beat earnings this quarter. That is because a stock
needs to have both a positive earnings ESP (Read:
Zacks Earnings ESP: A Better Method
) and a Zacks Rank of #1, 2 or 3 for this to happen. That is not
the case here as you will see below.
Negative Zacks ESP:
That is because the Most Accurate Estimate stands at 6 cents
while the Zacks Consensus Estimate is lower at 8 cents. That is a
difference of -25.00%.
Zacks Rank #4 (Sell).
Guess? currently holds a Zacks Rank #4 (Sell) which lowers the
predictive power of ESP because the Zacks Rank #4 when combined
with a negative ESP makes surprise prediction difficult.
We caution against stocks with Zacks Ranks #4 and #5 (Sell
rated stocks) going into earnings announcement, especially
when the company is seeing negative estimate revisions
Other Stocks to Consider
Here are some other companies you may want to consider as our
model shows they have the right combination of elements to post
an earnings beat this quarter:
Flower Foods Inc
), Earnings ESP of +2.86% and a Zacks Rank #1 (Strong Buy)
Harris Teeter Supermarkets Inc
), Earnings ESP of +1.47% and a Zacks Rank #2 (Buy)
), Earnings ESP of +3.03% and a Zacks Rank #2 (Buy)
FLOWERS FOODS (FLO): Free Stock Analysis
GUESS INC (GES): Free Stock Analysis Report
HARRIS TEETER (HTSI): Free Stock Analysis
ROUNDYS INC (RNDY): Free Stock Analysis
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