), one of the leading department store retailers, to beat
expectations when it reports second-quarter fiscal 2014 results on
Aug 13. In the last quarter, it posted a positive surprise of
Why a Likely Positive Surprise?
Our proven model shows that Macy's is likely to beat earnings
estimate this quarter. A stock needs to have both a positive
and a Zacks Rank #1 or 2 or 3 for this to happen. Macy's has the
right combination of two key components.
Macy's currently has an Earnings ESP of +1.16%. This is because the
Most Accurate estimate stands at 87 cents, while the Zacks
Consensus Estimate is pegged at 86 cents.
The company carries a Zacks Rank #3 (Hold). Note that stocks with a
Zacks Ranks of #1, 2 and 3 have a significantly higher chance of
beating earnings estimates. The Sell-rated stocks (Rank #4 and 5)
should never be considered going into an earnings announcement.
The combination of Macy's Zacks Rank #3 and +1.16% Earnings ESP
makes us confident of an earnings beat this release.
What is Driving Better-than-Expected Earnings?
We believe Macy's sustained focus on price optimization,
inventory management, merchandise planning, and private label
offerings are the primary catalysts driving traffic, facilitating
customer-oriented demand fulfillment and improving in-store
shopping experience. In an attempt to increase sales, profitability
and cash flows, the company has been taking steps such as
integration of operations, consolidation of divisions as well as
developing e-commerce business and online order fulfillment
centers. Management is also optimistic about capturing sales
opportunities with its fresh inventory along with My Macy's
localization initiatives, omnichannel integration and Magic
In the last four quarters, Macy's outperformed the Zacks
Consensus Estimate by an average of 6%.
Stocks that Warrant a Look
Here are some other companies you may want to consider as our
model shows that these have the right combination of elements:
Chipotle Mexican Grill, Inc. (
) has an Earnings ESP of +0.79% and a Zacks Rank #1 (Strong
Abercrombie & Fitch Co. (
) has an Earnings ESP of +20.00% and a Zacks Rank #3.
GameStop Corp. (
) has an Earnings ESP of +26.32% and a Zacks Rank #3.
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