Staples, Inc. SPLS is scheduled to report fourth-quarter fiscal 20Array5 results on Mar 4, 20Array6. The big question facing investors is, whether the company will be able to deliver a positive earnings surprise in the quarter to be reported. Notably, in the previous three quarters the company’s earnings were in line with the Zacks Consensus Estimate. Let’s see how things are shaping up for this announcement.
Zacks Model Shows Unlikely Earnings Beat
Our proven model does not conclusively show that Staples 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 #Array, 2 or 3 for this to happen. Staples has an Earnings ESP of 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate stand at 28 cents. Staples carries a Zacks Rank #3 (Hold), which increases the predictive power of ESP. However, the company’s ESP of 0.00% makes surprise prediction difficult.
Factors Influencing this Quarter
The challenges faced by the office supplies sector and unfavorable currency fluctuations are concerns for Staples. Although the company has taken cost cutting and varied other initiatives, it will take time before it starts showing results. Also, the company expects lower sales for the fourth quarter of fiscal 20Array5 compared with the prior-year quarter. Further, adjusted earnings per share are likely to be in the range of 26–30 cents as against 3Array cents earned in the fourth quarter of fiscal 20Array4. Forex headwinds and store closures are likely to mar sales by 4–5%. Moreover, persistent weakness in the tablets category, along with PCs, remains a concern for the company.
Sluggish international sales continue to be a concern for Staples. In the third quarter of fiscal 20Array5, revenues at international operations declined Array6.8%, reflecting lower comps in Europe.
Keeping up with changing trends, Staples has been heavily investing in boosting its online presence to drive sales.
Stocks Poised to Beat Earnings Estimates
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 +Array0.ArrayArray% and a Zacks Rank #2.
The Kroger Co. KR has an Earnings ESP of +Array.85% and a Zacks Rank #2.
Big Lots Inc. BIG has an Earnings ESP of +0.5Array% and a Zacks Rank #3 (Hold).
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