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Zoe's Kitchen (ZOES) Q4 Earnings Preview: What's in Store?

Zoe's Kitchen, Inc.ZOES is scheduled to report fourth-quarter and full-year 2016 numbers on Feb 23, after the market closes .

Last quarter, the company's earnings were in line with the Zacks Consensus Estimate. In fact, it met/surpassed the Zacks Consensus Estimate in all of the last four quarters, with an average beat of 25.00%.

Zoe's Kitchen, Inc. Price and EPS Surprise

Zoe's Kitchen, Inc. Price and EPS Surprise | Zoe's Kitchen, Inc. Quote

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

Factors at Play

Zoe's Kitchen began trading in Apr 2014. This fast-casual restaurant specializing in Mediterranean cuisine has posted better-than-expected or in-line revenues and earnings in all of the quarters so far, except for the last two quarters, where revenues fell below expectations.

Notably, the third quarter of 2016 marked the company's 27th consecutive quarter of positive comps. We expect this trend has continued in the to-be-reported quarter as well, given the company's increased focus on menu innovation and marketing and promotional campaigns to promote these items. Moreover, Zoe's Kitchen's increased focus on catering, enhancing digital capabilities as well as consistent unit expansion are expected to drive top-line growth.

However, increasing labor costs along with higher store operating expenses and expansive investments in technology may dent the company's profits in the to-be-reported quarter. Furthermore, the industry's slower traffic trend, along with heavy and prolonged discounting remains a potent headwind for the company's top line.

Earnings Whispers

Our proven model does not conclusively show that Zoe's Kitchen is likely to beat earnings 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. That is not the case here, as you will see below.

Zacks ESP: Zoe's Kitchen has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at a loss of 6 cents. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks Rank: Zoe's Kitchen has a Zacks Rank #4 (Sell).

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

Stocks to Consider

Here are some companies to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:

Jack in the Box Inc. JACK has an Earnings ESP of +2.42% and a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank stocks here .

SpartanNash Company SPTN has an Earnings ESP of +2.04% and a Zacks Rank #2.

The Priceline Group Inc. PCLN has an Earnings ESP of +0.46% and a Zacks Rank #3.

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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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