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Guess? Inc. (GES - Analyst Report) is set to report secons quarter fiscal 2014 results on Aug 28, 2013. Last quarter, it posted a 75.0% negative surprise. Let’s see how things are shaping up for this announcement.

Factors to Consider This Quarter

According to data published by the company last month comps in the first two months of the second quarter were sluggish due to unfavorable weather. Although weather improved in the subsequent month, the ‘back to school’ season was unable to trigger much gain in sales for GES because of lower domestic spending.

Overall, revenues and comps have been soft for the past few quarters, due to the tough retail conditions prevailing throughout the nation. Margins have also been sluggish due to higher cost of sales. We do not expect the second quarter to be any different.

Earnings Whispers?

Our proven model does not conclusively show that Guess? is likely to beat earnings this quarter. That is because a stock needs to have both a positive earnings Expected Surprise Prediction (ESP) (Read: Zacks Earnings ESP: A Better Method) and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as shown below.

Negative Zacks ESP: The Most Accurate estimate stands at $1.14 while the Zacks Consensus Estimate is higher at $1.20. That is a difference of -5.00%.

Zacks Rank #4 (Sell): Guess?’s Zacks Rank #4 (Sell) lowers the predictive power of ESP because the Zacks Rank #4 (Sell) when combined with a negative ESP makes surprise prediction difficult.

We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

Here are some other companies worth considering as our model shows that they have the right combination of elements to post an earnings beat this quarter:

  • Pilgrims Pride Corp. (PPC - Snapshot Report) -- Earnings ESP of +35.09% and a Zacks Rank #1 (Strong Buy)
  • Citi Trends Inc. (CTRN - Analyst Report) -- Earnings ESP of +10.00% and a Zacks Rank #1 (Strong Buy)
  • The Buckle Inc. (BKE - Snapshot Report) -- Earnings ESP of +2.20% and a Zacks Rank #3 (Hold)

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