Will DSW Disappoint This Earnings Season?

Zacks

DSW Inc. (DSW), retailer of footwear and accessories, is set to report its first quarter fiscal 2014 results on May 28, 2014. Last quarter, it posted a positive surprise of 6.90%. Let us see how things are developing for this announcement.

Factors Influencing the Quarter

Difficult retail environment along with inclement weather (February and March) is likely to have a negative impact on DSW’s first-quarter fiscal 2014 results. Further, softness in Women’s category due to lack of new fashion trends in its collection remains a concern.

Earnings Whispers

Our proven model does not conclusively project DSW as likely to beat earnings 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. This is not the case here as you will see below.

Zacks ESP: ESP (Expected Surprise Prediction) for DSW is 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate stand at 48 cents.

Zacks Rank: DSW’s Zacks Rank #4 (Sell) when combined with a 0.00% ESP makes surprise prediction unlikely. We caution against stocks with a Zacks Rank #4 and #5 (Sell-rated stocks) going into an earnings announcement, especially when the company is witnessing negative estimate revisions.

Other Stocks to Consider

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

Bank of Montreal (BMO) with an Earnings ESP of +0.73% holds a Zacks Rank #3.

The Bank of Nova Scotia (BNS) with an Earnings ESP of +1.67% holds a Zacks Rank #3.

Lions Gate Entertainment Corp. (LGF) has an Earnings ESP of +2.56% and a Zacks Rank #3.

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