bebe stores inc. (BEBE) is slated to report its first-quarter fiscal 2015 results on Nov 6, 2014. In the last quarter, it posted a positive surprise of 10.0%. Let’s see how things are shaping up for this announcement.
Factors Influencing the Upcoming Quarter
This women’s clothing and accessories designer has been posting disappointing results for the past eight quarters due to weak top-line performance and higher operating expenses.
After reporting a loss again in the last quarter, bebe forecasts comps to be in the negative low-single digit to flat range for the first quarter of fiscal 2015. Gross margin is expected to decelerate year over year, owing to higher expected markdowns and deleverage of fixed expenses.
Net loss for the quarter is expected to be in the high-teens per share range due to continued impact from the maintenance of valuation accounts. Thus, we remain apprehensive about the company’s performance in the upcoming quarter.
Earnings Whispers?
Our proven model does not conclusively show that bebe stores 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: bebe stores currently has an Earnings ESP of 0.00%. This is because the Most Accurate estimate stands at a loss of 19 cents per share, in line with the Zacks Consensus Estimate.
Zacks Rank: bebe stores’ Zacks Rank #4 (Strong Sell) when combined with a zero ESP makes surprise prediction unlikely. 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.
Stocks That Warrant a Look
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:
L Brands Inc. (LB) has an Earnings ESP of +6.25% and a Zacks Rank #2 (Buy).
The Kroger Co. (KR) with an Earnings ESP of +3.28% has a Zacks Rank #2.
Dean Foods Company (DF) has an Earnings ESP of +15.39% and a Zacks Rank #3 (Hold).
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