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Kirkland’s Inc. (KIRK - Analyst Report) is set to report third-quarter fiscal 2013 results on Nov 22. Last quarter, it posted a 70.0% positive surprise. Let us see how things are shaping up for this announcement.

Factors to be Considered this Quarter

Kirkland’s has been witnessing strong traffic in its stores for the past few months, which is expected to boost comps in the third quarter. Kirkland’s expects earnings per share between 80 cents and 90 cents, up from the previous guidance range of 75 cents–85 cents. Kirkland’s raised its guidance outlook following decent conversion and customer traffic,  Kirkland’s expects fiscal 2013 total sales to increase approximately 3% to 4% compared with fiscal 2012, instead of 3% to 5% as expected earlier.

We are encouraged by the optimistic outlook and strong comps of the home furnishing retailer. Moreover, with a flourishing housing sector, demand for home furnishings is growing and it is expected to boost sales during the quarter. Kirkland’s is also expected to improve its margins during the third quarter as it has started to close down its smaller under-performing stores in the malls and is opening bigger off-mall stores at popular locations.

Earnings Whispers?

Our proven model does not conclusively show that KIRK is likely to beat earnings this quarter. A stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. However, that is not the case here due to the following factors:

Zacks ESP: ESP for KIRK is 0.00%

Zacks Rank:Kirkland’s Earnings ESP of 0.00% combined with Zacks Rank #1 (Strong Buy) makes surprise prediction difficult. So we are not confident about an earnings beat.

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.

Other 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:

Best Buy Co., Inc.(BBY - Analyst Report), with Earnings ESP of +9.09% and a Zacks Rank #1 (Strong Buy).

Tivo Inc.(TIVO - Analyst Report), with Earnings ESP of +16.67% and a Zacks Rank #2 (Buy).

Trina Solar Limited (TSL - Snapshot Report), with Earnings ESP of +77.78% and a Zacks Rank #2 (Buy).

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