ANN INC. (ANN), apparel and shoe retailer is slated to report its second-quarter fiscal 2014 earnings on Aug 22, 2014. In the previous quarter, the company delivered a negative earnings surprise of 2.94%. Let’s see how things are shaping up for this announcement.
Factors Influencing this Quarter
ANN’s first quarter was impacted by extreme winter, slow consumer traffic and intense promotional headwinds. The company’s preliminary results on this quarter were not as impressive as ANN delivered dismal preliminary comparable store sales (comps) and gross margin results. While weak comps were blamed on the same aforementioned headwinds, the built-up pressure on gross margin was due to the measures taken by the company to clear summer inventory. Given the soft preliminary results, we remain less constructive on the company’s earnings results for the second quarter.
Earnings Whispers
Our proven model does not conclusively show that ANN 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 #1, #2 or #3 for this to happen. This is not the case here as you will see below.
Negative Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is currently pegged at -1.43%. This is because the Most Accurate estimate of 69 cents is below the Zacks Consensus Estimate of 70 cents.
Zacks Rank: ANN carries a Zacks Rank #5 (Strong Sell). We caution against stocks with Zacks Rank #4 and #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Other Stocks to Consider
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:
Abercrombie & Fitch Co. (ANF), Earnings ESP of +10.00% and a Zacks Rank #2 (Buy).
Dollar Tree, Inc. (DLTR), Earnings ESP of +7.69% and a Zacks Rank #3.
Costco Wholesale Corporation (COST), Earnings ESP of +1.33% and a Zacks Rank #3.
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