Best Buy Co Inc. BBY, one of the leading consumer electronics retailers in the U.S., is slated to report its fourth-quarter fiscal 2015 earnings on Mar 3. In the last quarter, it had delivered a positive earnings surprise of 28%. Let’s see how things are shaping up for this announcement.
Factors Affecting the Quarter
Better product drivers, like iPhone 6 and large screen TVs, along with the company’s vigorous cost cutting initiatives and improving online sales are likely to positively impact its results in the quarter. This was reflected in the company’s strong holiday sales data. Though Best Buy upgraded its fourth-quarter fiscal 2015 outlook, we believe that ongoing incremental investments and challenges presented by the sector might spell trouble for the retailer.
Earnings Whispers
Our proven model does not conclusively show that Best Buy is likely to beat earnings 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: ESP for Best Buy is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at $1.36.
Zacks Rank: Best Buy’s Zacks Rank #3 (Hold) increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings beat.
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 companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
The Kroger Co. KR has an Earnings ESP of +6.74% and a Zacks Rank #2 (Buy).
ULTA Salon, Cosmetics & Fragrance, Inc. ULTA has an Earnings ESP of +0.79% and a Zacks Rank #2.
Zumiez, Inc. ZUMZ has an Earnings ESP of +1.27% and a Zacks Rank #2.
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