Bebe Stores, Inc. BEBE is slated to report first-quarter fiscal 2016 results on Nov 5, after the closing bell. In the last quarter, the company delivered a negative earnings surprise of 25%. Let’s see how things are shaping up for this announcement.
Factors Influencing This Quarter
Though Bebe Stores expects to gain from its new fall collection and ramp up of marketing activities, the company believes sales for the first quarter of fiscal 2016 will continue to be impacted by markdowns on slow moving merchandise.
For first-quarter fiscal 2016, Bebe Stores expects comps to decline in the mid-single digit range. Gross margin is expected to contract year over year owing to increased markdowns in the early part of the quarter in order to clear excess inventory related to the failure of the July Bohemian collection.
Further, net loss per share for the first quarter is expected in the high-teens range. This guidance also reflects continued impact from the maintenance of valuation allowance over deferred tax assets, resulting in nearly 0% effective tax rate.
However, the company intends to continue implementing its strategic initiatives which include, improving store productivity, undertaking eCommerce development and expanding globally.
Earnings Whispers
Our proven model does not conclusively show that Bebe Stores is likely to beat estimates 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 Bebe Stores is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are at a loss of 17 cents.
Zacks Rank: Bebe Stores 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 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:
Michael Kors Holdings Limited KORS has an Earnings ESP of +3.37% and a Zacks Rank #3.
Dean Foods Company DF has an Earnings ESP of +4.00% and a Zacks Rank #3.
CST Brands, Inc. CST has an Earnings ESP of +3.57% and a Zacks Rank #3.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment