We expect the Washington-based retailer of sports-related teen apparel, Zumiez Inc.ZUMZ to beat expectations when it reports fourth-quarter 2015 results on Mar 10.
Why a Likely Positive Surprise?
Our proven model shows that Zumiez may beat earnings because it has the right combination of two key components.
Zacks ESP: Zumiez currently has an Earnings ESP of +2.08%. This is because the Most Accurate estimate stands at 49 cents, while the Zacks Consensus Estimate is pegged at 48 cents. A favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive earnings surprise.
Zacks Rank: Zumiez carries a Zacks Rank #2 (Buy). Note that stocks with a Zacks Rank #1, 2 or 3 have a significantly higher chance of beating earnings. Conversely, Sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement.
The combination of Zumiez's Zacks Rank #2 and Earnings ESP of +2.08% makes us reasonably confident of a positive earnings beat.
What is Driving the Better-than-Expected Earnings?
Despite the lingering soft comparable-store sales trend, Zumiez has gained some momentum due to its focus on turning its performance around by testing new brands; analyzing every aspect of its business across brands and geographies; reviewing its coordinated marketing and product plans; and revisiting its promotional strategies along with the strategic use of private label. Further, the company remains optimistic about its performance in the European market.
Though the company posted soft January sales, it reiterated its previously announced guidance for the fourth quarter, anticipating sales in the range of $237-$239 million, with earnings per share of 45-47 cents.
Moreover, Zumiez's focus on investing in global expansion, enhancing omni-channel capacities and its customer-centric approach, bode well. Alongside, shareholder-friendly moves underscore its financial strength.
Zumiez has topped the Zacks Consensus Estimate in the trailing four quarters with an average positive surprise of 6.04%, with in line results in three quarters. In the last concluded quarter, the company delivered an earnings beat of 24.14%.
Other Stocks to Consider
Zumiez is not the only firm looking up this earnings season. The following companies are also likely to beat earnings in the to-be-reported quarter:
Amazon.com, Inc. AMZN has an Earnings ESP of +89.83% and a Zacks Rank #3 (Hold).
GameStop Corp. GME has an Earnings ESP of +0.44% and a Zacks Rank #3.
Fastenal Company FAST has an Earnings ESP of +2.27% and a Zacks Rank #3.
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