) is set to report second-quarter fiscal 2014 results on Aug 21.
Last quarter, the company posted a 20.0% positive surprise. Let us
see how things are shaping up for this announcement.
Factors to be Considered this Quarter
The company turned around in the first quarter after posting
decline in comps for the last few quarters. In the first quarter
the company posted positive comps backed by decent gains in
transactions and average tickets at its stores.
The new merchandising and marketing strategies undertaken during
the first quarter of fiscal 2014 are helping Kirkland's expand its
customer base and also drive strong margin gains. These initiatives
have helped Kirkland's witness witnessing strong traffic in its
stores for the past few months, which is expected to boost comps in
the second quarter.
Management issued an optimistic outlook for the second quarter of
fiscal 2014. The company expects net sales in the range of $104 to
$105 million, up 7% to 8% from prior-year level. Comps are expected
to increase in the range of 3% to 4% versus a decrease of 0.2% in
the prior-year quarter.
We are encouraged by the positive outlook and strong comps of the
home furnishing retailer. Moreover, with a flourishing housing
sector, demand for home furnishings is growing and it is expected
to boost sales in the to-be-reported quarter.
Our proven model does not conclusively show that Kirkland's is
likely to beat earnings this quarter. A stock needs to have both a
and a Zacks Rank of #1, 2 or 3 for this to happen. However, that is
not the case here due to the following factors:
Positive Zacks ESP:
ESP for KIRK is 25.00%. The Most Accurate Estimate stands at a loss
of 3 cents and the Zacks Consensus Estimate stands at 4 cents.
Kirkland's has a Zacks Rank #4 (Sell) which when combined with a
25.00% ESP makes surprise prediction difficult.
We caution against stocks with Zacks Rank #4 and 5 (Sell-rated
stocks) going into the earnings announcement, especially when the
company is seeing negative estimate revisions momentum.
Other Stocks to Consider
Other stocks in the consumer staples sector that have both a
positive Earnings ESP and a favorable Zacks Rank are:
Sanderson Farms Inc. (
), with an Earnings ESP of +4.92% and a Zacks Rank #1.
Abercrombie & Fitch Company (
), with an Earnings ESP of +20.00% and a Zacks Rank #2 (Buy).
Shoe Carnival Inc. (
), with an Earnings ESP of +5.88% and a Zacks Rank #2.
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KIRKLANDS INC (KIRK): Free Stock Analysis
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