Bebe Stores Inc. BEBE is slated to report its third-quarter fiscal 2015 results on May 7, 2015. In the last quarter, it posted a positive surprise of 200.0%. Let’s see how things are shaping up for this announcement.
Factors Influencing This Quarter
Following a strong second-quarter fiscal 2015, this women’s clothing and accessories designer provided a decent outlook for the third quarter, wherein it expects comparable-store sales to grow in the low- to mid-single digit range. Further, it expects gross margin to expand owing to higher effort toward margin optimization and lower planned promotional activities.
However, given its usual trend of reporting lower volumes in the third quarter, the company expects to report net loss per share in the mid-teens range. This is because the lower volumes may deleverage on fixed costs. Hence, we remain slightly apprehensive about the company’s performance in the quarter to be reported.
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 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 currently has an Earnings ESP of 0.00%. This is because the Most Accurate estimate stands at a loss of 14 cents per share, in line with the Zacks Consensus Estimate.
Zacks Rank: Bebe Stores’ Zacks Rank #3 (Hold) when combined with ESP of 0.00% makes surprise prediction difficult. 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:
Urban Outfitters Inc. URBN has an Earnings ESP of +6.67% and a Zacks Rank #2 (Buy).
The Home Depot Inc. HD with an Earnings ESP of +2.61% has a Zacks Rank #3.
Macy’s Inc. M has an Earnings ESP of +1.64% and a Zacks Rank #3.
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