Guess? Inc. GES is set to report fourth-quarter fiscal 2015 results on Mar 18. Last quarter, it posted a positive earnings surprise of 33.3%. Let us see how things are shaping up for this announcement.
Factors to Consider
Guess? has reported soft revenues for the past few quarters due to decline in comps in the North American retail stores. Tough retail conditions lowered consumer traffic in the retail stores which led to the lackluster comps. We apprehend this trend to have a negative effect on the fourth-quarter result as well.
Management is not optimistic about the to-be-reported quarter as comps were soft in its early days of the quarter. It lowered the fiscal 2015 outlook in the third-quarter conference call following soft results. The company lnow expects fiscal 2015 revenue in the range of $2.42 to $2.43 billion. Operating margin guidance is expected in the range of 5% to 5.5% while adjusted earnings are expected within $1.00 to $1.10.
Earnings Whispers
Our proven model does not conclusively show that Guess? is likely to beat earnings this quarter. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 to surpass earnings estimates. However, that is not the case here due to the following factors:
Negative Zacks ESP: ESP for Guess? is -1.72%. This is because the Most Accurate estimate stands at 57 cents a share, while the Zacks Consensus Estimate is pegged at 58 cents.
Zacks Rank: Guess? currently has a Zacks Rank #4 (Sell).
We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Stocks to Consider
Here are some other companies you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Gildan Activewear Inc. GIL, with an Earnings ESP of +2.13% and a Zacks Rank #1 (Strong Buy).
G-III Apparel Inc. GIII, with an Earnings ESP of +2.41% and a Zacks Rank #2 (Buy).
Lululemon Athletica Inc. LULU, with an Earnings ESP of +1.37% and a Zacks Rank #3 (Hold).
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