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hhgregg (HGG) Q3 Earnings: What's in Store for the Stock?

hhgregg, Inc.HGG , a specialty retailer of home appliances, electronics and furniture is slated to release its third-quarter fiscal 2017 results on Jan 26. The question facing the investors is, whether the company will be able to post a positive earnings surprise in the quarter to be reported. In the last quarter, hhgregg had posted a negative earnings surprise of 30.8%. However, the company has outpaced the Zacks Consensus Estimate by an average of 9.6% in the trailing four quarters. Let's see how things are shaping up for this announcement.

Zacks Model Shows Unlikely Earnings Beat

Our proven model does not conclusively show that hhgregg is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen.

HHGregg, Inc. Price and EPS Surprise

HHGregg, Inc. Price and EPS Surprise | HHGregg, Inc. Quote

hhgregg has an Earnings ESP of 0.00%, as the Most Accurate estimate and the Zacks Consensus Estimate both stand at a loss of 26 cents. The company carries a Zacks Rank #3, which increases the predictive power of ESP. However, its ESP of 0.00% makes surprise prediction difficult. You may uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Factors Influencing this Quarter

hhgregg is expected to report soft sales during the fiscal third quarter compared with the prior year due to competitive pressure in the market. For the fiscal third quarter, the company projects net sales to decline approximately 24% year over year to $453 million, with a drop of approximately 22% in comparable store sales (comps).

The dismal comps performance of the company is due to decline in comps across all its segments. The consumer electronics category was affected the most as it is a larger mix of the business during the holidays. It is expected to plunge around 39%. The appliance category is expected to dip approximately 4% and the home products category is estimated to decrease approximately 9%.

hhgregg has been reporting losses and declining revenues for the past many quarters, primarily due to weak comps. We noted that the stock has plummeted 64.8% in the past one year, clearly underperforming the Zacks categorized Retail-Consumer Electronics industry's gain of 40.5%.

However, hhgregg has been making efforts to revive the business, which include driving store traffic, enhancing brand recognition, cost containment and multi-channel approach. Also, the company is shifting its focus from consumer electronics to appliances and furniture. Alongside, management is focusing on enhancing its eCommerce business.

Stocks Poised to Beat Earnings Estimates

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

Michael Kors Holdings Limited KORS has an Earnings ESP of +2.45% and a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank stocks here .

Tractor Supply Company TSCO has an Earnings ESP of +1.09% and a Zacks Rank #2.

Yum! Brands, Inc. YUM has an Earnings ESP of +2.82% and a Zacks Rank #3.

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HHGregg, Inc. (HGG): Free Stock Analysis Report

Yum! Brands, Inc. (YUM): Free Stock Analysis Report

Tractor Supply Company (TSCO): Free Stock Analysis Report

Michael Kors Holdings Limited (KORS): Free Stock Analysis Report

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


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

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