Rent-to-own specialty retailer, Aaron's Inc. AAN, is set to report its first-quarter 2015 earnings results on Apr 24. In the last quarter, it posted a positive surprise of 8.3%. Let us see how things are developing for this announcement.
Factors Influencing the Quarter
Following the strong fourth-quarter 2014 results, the company provided a favorable outlook for 2015. Aaron's also stated that it has made significant progress riding on its strategic initiatives, mainly cost reduction, aimed at strengthening its core business.
Overall, the company’s strategic plans focus on bringing it back to profitability by stimulating same-store sales growth, building a strong online platform, optimizing cost savings to expand margins, limiting company-operated store growth to 2%–3% per year and encouraging expansion of its franchise store base.
Further, the company’s performance appears impressive based on its eCommerce growth and the opportunities from the Progressive acquisition. Therefore, we remain optimistic about the company’s performance in this quarter.
Earnings Whispers
Our proven model does not conclusively project Aaron's as likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and Zacks Rank #1 #2 or #3 for this to happen. This is not the case here as you will see below.
Zacks ESP: ESP for Aaron’s is 0.00%. This is because the Most Accurate estimate stands at 54 cents per share, which is in line with the Zacks Consensus Estimate.
Zacks Rank: Aaron’s Zacks Rank #3 (Hold) when combined with a zero ESP makes surprise prediction difficult. 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.
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:
American Eagle Outfitters Inc.’s AEO Earnings ESP stands at +18.18% and it carries a Zacks Rank #2 (Buy).
Best Buy Co. Inc. BBY with an Earnings ESP of +3.45% holds a Zacks Rank #3.
Deckers Outdoor Corp.’s DECK Earnings ESP stands at +100.00% and it carries a Zacks Rank #3.
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