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Will Genesco (GCO) Miss Earnings Estimates This Season? - Analyst Blog

Genesco Inc. ( GCO ), a retailer and wholesaler of branded footwear, apparel, and accessories, is slated to report second-quarter fiscal 2015 results on Aug 28, 2014. In the last quarter, it posted a negative surprise of 11%. Let's see how things are shaping up for this announcement.

Factors Affecting This Quarter

We are optimistic about Genesco's top-line performance given the improved sales trends at the company's stores following the soft trends witnessed at the end of fiscal 2014. Along with its first-quarter fiscal 2015 results, the company revealed that its business is gaining momentum as from improved comps for the period between the start of the second quarter through May 24.

However, we are slightly cautious about the company's bottom-line performance which has been hurt by higher cost of sales and elevated operating expenses. Going ahead, we believe that the company's bottom-line results will remain under pressure throughout fiscal 2015 due to a highly promotional retail environment and increased expenses toward enhancement of its digital presence as well as omni-channel growth.

Earnings Whispers?

Our proven model does not conclusively show that Genesco is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP (Expected Surprise Prediction) and a Zacks Rank of #1, 2 or 3 for this to happen. This is not the case here as you will see below.

Zacks ESP : Genesco currently has an Earnings ESP of -1.82%. This is because the Most Accurate estimate stands at 54 cents a share, which is a penny higher than the Zacks Consensus Estimate.

Zacks Rank : Genesco's Zacks Rank #3 (Hold) when combined with a negative ESP makes surprise prediction difficult. We caution against stocks with a Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Other Stocks to Consider

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

Zoe's Kitchen, Inc. ( ZOES ) has an Earnings ESP of +50.00% and a Zacks Rank #2 (Buy).

Abercrombie & Fitch Co. ( ANF ) has an Earnings ESP of +10.00% and a Zacks Rank #2.

Shoe Carnival Inc. 's ( SCVL ) Earnings ESP stands at +5.88% and it carries a Zacks Rank #2.

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SHOE CARNIVAL (SCVL): Free Stock Analysis Report

GENESCO INC (GCO): Free Stock Analysis Report

ZOES KITCHEN (ZOES): 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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