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Will Strong Dollar End Guess' (GES) Earnings Streak in Q4?

Guess', Inc.GES is set to report fourth-quarter fiscal 2016 and full-year results on Mar 16, after the market closes. Last quarter, the company posted a positive earnings surprise of 36.4%. Guess' has surpassed the earnings estimates in all the trailing four quarters, with a significant average positive surprise of 66.25%.

Let's see how things are shaping up for the upcoming announcement.

Factors at Play

Guess' has reported consistent revenue growth over the past few quarters supported by the strength in the e-Commerce business. The e-Commerce segment delivered solid top-line growth in fiscal third quarter - for the 17 th time in a row - and the trend is expected to continue in fiscal fourth quarter as well.

The company started advertising on social networking sites like Facebook and Twitter in fiscal second-quarter 2016. During the fiscal year, the company also extended its online business to Europe. This is expected to boost sales in the to-be-reported quarter.

Further, lower gas prices have led to higher savings among consumers who are spending more on healthcare, at restaurants and in discount stores. This should have a positive impact on fiscal fourth-quarter results.

However, currency exchange continues to be a headwind as the U.S. dollar remains strong. Further, tough retail environment, combined with warmer-than-expected weather, is likely to keep store traffic under pressure in the upcoming quarter.

Earnings Whispers

Our proven model does not conclusively show that Guess' is likely to beat estimates this quarter. That 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. That is not the case here as you will see below.

Zacks ESP : Earnings ESP for Guess' is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 58 cents.

Zacks Rank : Guess' has a Zacks Rank #3 which when combined with a 0.00% ESP makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Stocks That Warrant a Look

Here are some stocks in the broader consumer discretionary industry that investors may consider which, as per our model, they have the right combination of elements to post an earnings beat this quarter:

G III Apparel GIII , with an Earnings ESP of +7.14% and a Zacks Rank #3.

American Public Education Inc. APEI , with an Earnings ESP of +11.11% and a Zacks Rank #1.

Prestige Brands, Inc. PBH , with has an Earnings ESP of +2.04% 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

AMER PUB EDUCAT (APEI): Free Stock Analysis Report

PRESTIGE BRANDS (PBH): Free Stock Analysis Report

GUESS INC (GES): Free Stock Analysis Report

G-III APPAREL (GIII): 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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