Genesco Inc. GCO is expected to report first-quarter fiscal 2016 results on May 29. In the last quarter, the company had delivered a negative earnings surprise of 4.2%. Let’s see how things are shaping up for this announcement.
Factors Influencing this Quarter
We remain impressed with the company’s constant omni-channel endeavors, which are likely to be key growth drivers. However, Genesco has underperformed the Zacks Consensus Estimate by an average of 16.1% over the past four quarters, delivering a negative surprise in every quarter. Further, the ongoing challenges in the Lids Sports Group segment coupled with negative foreign currency translations and supply chain uncertainties due to increased backlog from the West Coast port disruptions led management to provide a conservative outlook for fiscal 2016. Consequently, we remain cautious of the upcoming results.
Earnings Whispers
Our proven model does not conclusively show that Genesco is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below:
Zacks ESP: Earnings ESP for Genesco is currently pegged at 0.00%. This is because the Most Accurate estimate and the Zacks Consensus Estimate both stand at 69 cents.
Zacks Rank: Genesco carries a Zacks Rank #3 (Hold). Though a Zacks Rank #3 increases the predictive power of ESP, the company’s 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 companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Big 5 Sporting Goods Corp. BGFV has an Earnings ESP of +6.67% and a Zacks Rank #1 (Strong Buy).
Casey's General Stores, Inc. CASY has an Earnings ESP of +14.29% and a Zacks Rank #2 (Buy).
Tractor Supply Company TSCO has an Earnings ESP of +0.90% and a Zacks Rank #3.
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