Vipshop Holdings Limited (VIPS) is set to report fourth-quarter and full-year 2014 results on Feb 16. Last quarter, the company posted in-line results. Let’s see how things are shaping up for this announcement.
Factors at Play
Vipshop Holdings has been posting decent earnings results over the past few quarters on the back of higher revenues and solid expense management. The China-based lifestyle product retailer’s decision to focus on in-season categories with special discount is expected to aid fourth-quarter sales results.
During the third quarter, Vipshop started revamping its mobile application further making it more customer-friendly. This is encouraging and should boost the company's top line in the fourth quarter as more consumers are switching from computers to mobile for online shopping. Moreover, China’s Singles Day on Nov 11, 2014, when e-Commerce players recorded significant sales by offering heavy discounts and promotions, turned out well for Vipshop.
However, ongoing macroeconomic slowdown in China and increasing competition in the retail scenario may offset these positives. Again, higher investment in warehouse expansion may weigh on fourth-quarter margins.
Earnings Whispers
Our proven model does not conclusively show that Vipshop Holdings will beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 9 cents per share. Hence, the difference is 0.00%.
Zacks Rank: Vipshop Holdings’ Zacks Rank #3 (Hold) when combined with a 0.00% ESP 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 momentum.
Stocks to Consider
You could consider the following consumer staples stocks with a positive Earnings ESP and a favorable Zacks Rank such as:
Whole Foods Market Inc. (WFM), with an Earnings ESP of +2.22% and a Zacks Rank #2 (Buy).
Sandersons Farms Inc. (SAFM), with an Earnings ESP of +22.50% and a Zacks Rank #2.
Kraft Foods Group Inc. (KRFT), with an Earnings ESP of +1.37% and a Zacks Rank #3.
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