Pacific Sunwear of California Inc. PSUN, a sports and fashion retailer, is slated to report its first-quarter fiscal 2015 earnings on May 28, 2015. In the previous quarter, the company delivered a positive earnings surprise of 9.1%. Let’s see how things are shaping up for this announcement.
Factors Influencing this Quarter
Pacific Sunwear’s sales improved considerably in the last quarter, with growth in both comparable-store sales (comps) and e-commerce sales. Also, increased merchandise margins and strong inventory management aided gross margin expansion. However, disruption at the West Coast ports and severe weather has compelled the company to issue a cautious guidance for the first-quarter of fiscal 2015.
Given the above mentioned odds, the company estimates revenues in the first-quarter of fiscal 2015 to be between $167 million and $173 million, with comps in the range of negative 1% to positive 2%. Further, the company expects to report an adjusted loss 11—14 cents per share in the quarter as against a loss of 11 cents in the first quarter of fiscal 2014.
Hence, we remain cautious about the Pacific Sunwear’s performance in the quarter to be reported.
Earnings Whispers
Our proven model does not conclusively project Pacific Sunwear as likely to beat earnings 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 Pacific Sunwear is 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate stand at a loss of 11 cents.
Zacks Rank: Pacific Sunwear carries a Zacks Rank #4 (Sell). Pacific Sunwears’ Zacks Rank #4 when combined with an ESP of 0.00% makes surprise prediction unlikely.
We caution against stocks with a Zacks Rank #4 and #5 (Sell-rated stocks) going into an earnings announcement, especially when the company is seeing 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:
Casey’s General Stores, Inc. CASY has an Earnings ESP of +14.29% and a Zacks Rank #1 (Strong Buy).
Burlington Stores, Inc. BURL has an Earnings ESP of +5.00% and a Zacks Rank #3 (Hold).
Tiffany & Co. TIF has an Earnings ESP of +7.25% and a Zacks Rank #3.
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