PetSmart, Inc. (PETM), one of the leading pet food and related services store, is slated to report its third-quarter fiscal 2014 earnings on Nov 18. In the previous quarter, PetSmart recorded a positive earnings surprise of nearly 4.3%. Let’s see how things are shaping up for this announcement.
Factors Affecting this Quarter
A sluggish retail environment is likely to impact PetSmart’s financial performance in the quarter. Though the company is making sustained efforts to expand brand portfolio and assortments through innovation as well as efficient capital allocation and cost control, we believe all this will take some time to yield desired results. Moreover, competition from giants like Wal-Mart Stores Inc., which have lately penetrated the pet supply market will impact PetSmart’s business considerably.
Earnings Whispers
Our proven model does not conclusively show that PetSmart is likely to beat earnings this quarter. That 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.
Zacks ESP: For PetSmart, both the Most Accurate estimate and the Zacks Consensus Estimate stand at 95 cents resulting in Earnings ESP of 0.00%.
Zacks Rank: PetSmart’s carries a Zacks Rank #3 (Hold). Though Zacks Rank #1, 2 or 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 the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Other Major Earnings Slated for Next Week
Some other companies that are going to report earnings results next week include Staples, Inc. (SPLS), L Brands, Inc. (LB) and Target Corp. (TGT).
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