Will Weak Core Operations Impact Aaron's (AAN) Q2 Earnings? - Analyst Blog


Rent-to-own specialty retailer, Aaron's, Inc. ( AAN ), is set to report its second-quarter 2014 results on Jul 25, 2014. Last quarter, it posted in line earnings. Let us see how things are developing for this announcement.

Growth Factors this Quarter

Continuously deteriorating core operations remains a drag on Aaron's performance. As a result, earlier this month the company had lowered its earnings and sales forecast for the second quarter of fiscal 2014. Also, weakness in the consumer electronics sector and rising competition from online giants remain concerns. However, the recently acquired Progressive business has helped to partly offset disappointing results at its core operations. We believe the company's turnaround initiatives will prove a time consuming affair.  

Earnings Whispers

Our proven model does not conclusively project Aaron's as likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and Zacks Rank #1 #2 or #3 for this to happen. This is not the case here as you will see below.

Zacks ESP:   ESP for Aaron's is 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate stand at 36 cents.

Zacks Rank #5 (Strong Sell): We caution against stocks with a Zacks Rank #4 and #5 (Sell-rated stocks) going into an earnings announcement, especially when the company is witnessing negative estimate revisions.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows these to have the right combination of elements to post an earnings beat:  

Archer Daniels Midland Company ( ADM ) Earnings ESP stands at +9.33% and it carries a Zacks Rank #2 (Buy).

Colgate-Palmolive Co. ( CL ) with an Earnings ESP of +1.37% holds a Zacks Rank #2.

Marinemax Inc. ( HZO ) has an Earnings ESP of +13.21% and a Zacks Rank #2.

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AARONS INC (AAN): Free Stock Analysis Report

ARCHER DANIELS (ADM): Free Stock Analysis Report

COLGATE PALMOLI (CL): Free Stock Analysis Report

MARINEMAX INC (HZO): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: AAN , ADM , CL , HZO



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