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Staples (SPLS) to Report Q3 Earnings: What's in the Cards?

Staples, Inc.SPLS is slated to report third-quarter fiscal 2015 results on Nov 18. The big question facing investors is, whether the company will be able to deliver a positive earnings surprise in the quarter to be reported. In the preceding quarter, the company's earnings were in line with the Zacks Consensus Estimate. 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 Staples is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. Staples has an Earnings ESP of 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate stand at 35 cents. Staples carries a Zacks Rank #3 (Hold), which increases the predictive power of ESP. However, the company's ESP of 0.00% makes surprise prediction difficult.

Factors Influencing this Quarter

Ongoing store closures and unfavorable foreign currency fluctuations continue to mar Staples' quarterly performance. As a result, Staples had projected lower sales in the third quarter than the prior-year quarter. Adjusted earnings per share are likely to be in the range of 33-36 cents against 37 cents earned in the third quarter of fiscal 2014.

The office supply sector continues to grapple with secular headwinds. Moreover, rising competition from online giants like Amazon and penetration of mass merchandisers like Wal-Mart Stores into the office supplies space have considerably hampered the office retailer's business.

As a result, Staples has taken up store rationalization and aggressive cost-cutting measures, along with extensive investments to accelerate growth. Moreover, to effectively combat the odds, Staples will be acquiring rival Office Depot, in a $6.3 billion cash and stock deal. The transaction is expected to conclude by the end of 2015 or early 2016, subject to customary and antitrust regulatory approvals.

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:

Casey's General Stores, Inc. CASY has an Earnings ESP of +23.78% and a Zacks Rank #1 (Strong Buy).

Signet Jewelers Limited SIG has an Earnings ESP of +2.63% and a Zacks Rank #2 (Buy).

Costco Wholesale Corporation COST has an Earnings ESP of +1.72% and a Zacks Rank #3.

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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

STAPLES INC (SPLS): Free Stock Analysis Report

COSTCO WHOLE CP (COST): Free Stock Analysis Report

SIGNET JEWELERS (SIG): Free Stock Analysis Report

CASEYS GEN STRS (CASY): 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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