Williams-Sonoma, Inc. (WSM) is set to release its second-quarter fiscal 2014 results on Aug 27, after markets close. Last quarter, it posted a positive surprise. Let’s see how things are shaping up for this announcement.
Factors to Consider this Quarter
Williams-Sonoma expects earnings per share in the second quarter of 2014 to be in the range of 49 cents to 52 cents compared with 49 cents in the prior year quarter. The company expects net revenue in the range of $1.02 billion to $1.04 billion, which exceeds the year-ago level of $982 million. Comparable brand revenue is expected to increase in the range of 4% to 6% during the quarter.
Williams-Sonoma has been posting solid revenues and profits since late 2011. The positive momentum can be attributed to the company’s product innovation efforts, strong international presence, personalized service and strong marketing and execution. This positive trend is expected to continue in the upcoming quarter. However, a slowing housing market can soften demand for Williams-Sonoma’s products to some extent.
Earnings Whisper?
Our proven model does not conclusively show that Williams-Sonoma is likely to beat earnings this quarter. That 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. That is not the case here, as you will see below.
Zacks ESP: The Earnings ESP for Williams Sonoma is 0.00%.
Zacks Rank #2 (Buy): Williams-Sonoma carries a Zacks Rank #2 (Buy) which when combined with a 0.00% ESP makes surprise prediction difficult.
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 in the building and related sector that can be considered as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Beazer Homes USA Inc. (BZH), Earnings ESP of +5.88% and a Zacks Rank #3 (Hold).
The Dixie Group, Inc. (DXYN), Earnings ESP of +28.57% and a Zacks Rank #3 .
Martin Marietta Materials Inc. (MLM), Earnings ESP of +0.60% and a Zacks Rank #3.
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