) is set to report its first quarter fiscal 2015 results before the
opening bell on Jul 31. Last quarter, this specialty retailer of
consumer and other home products posted in-line results. Let's see
how things are shaping up prior to the announcement.
Factors to Consider
hhgregg has disappointed its investors in the past one year with
sluggish results, particularly due to its consumer electronic
category. The revenues or growth in the category have declined due
to lower-than-expected margins and declining industry demand for
flat screen televisions. Weak promotional activities are also
adding to the woes. In addition, lack of innovation in televisions
has been severely impacting overall store traffic.
The company also witnessed sluggishness in same-store sales in
the computing and wireless category in all the quarters of fiscal
2014. Weak comps were the result of a decline in demand for laptops
and lower average selling price for tablets. Category comps
declined due to the underperforming contract-based mobile phone
business, which the company exited during the fourth quarter.
The company's home products category, which showed signs of
weakness during the third quarter declined further in the fourth
However, the company is employing different initiatives to
revive its business such as product innovation, shifting focus from
one furniture brand to five brands and even exiting underperforming
businesses. The company is also focusing on its appliance category,
which continues to gain market share through higher sales since the
past 11 quarters. We believe these initiatives will take some time
to bear fruits, but can still expect some signs of improvement in
the first quarter of fiscal 2015.
Our proven model does not conclusively show that hhgregg is
likely to beat earnings this quarter. That is because a stock needs
to have both a positive
and a Zacks Rank of #1, 2 or 3 for this to happen. That is
not the case here as you will see below.
The ESP for hhgregg is 0.00% as both the Zacks Consensus Estimate
and the Most Accurate estimate stand at a loss of 17 cents per
hhgregg has a Zacks Rank #2 (Buy) which when combined with an ESP
of 0.00% makes surprise prediction difficult.
We caution against stocks with Zacks Ranks #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 retail sector that have both a positive
earnings ESP and a favorable Zacks Rank are:
Citi Trends Inc. (
), with Earnings ESP of +6.90% and a Zacks Rank #1 (Strong
Abercrombie & Fitch Co. (
), with Earnings ESP of +18.18% and a Zacks Rank #2 (Buy).
Conn's Inc. (
), with an Earnings ESP of +2.70% and a Zacks Rank #2.
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
HHGREGG INC (HGG): Free Stock Analysis Report
ABERCROMBIE (ANF): Free Stock Analysis Report
CITI TRENDS INC (CTRN): Free Stock Analysis
CONNS INC (CONN): Free Stock Analysis Report
To read this article on Zacks.com click here.