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Bed Bath & Beyond Inc. (BBBY - Analyst Report), the operator of home furnishing store chains, is slated to report its third-quarter fiscal 2013 results on Jan 8, 2014. In the last quarter, it posted a marginally positive surprise of 0.87%. Let’s see how things are shaping up for this announcement.

Factors this Past Quarter

Though Bed Bath & Beyond managed to deliver positive earnings and sales surprises in second-quarter fiscal 2013, the company’s margins remained soft during the quarter due to higher operating costs, increase in coupons and their redemption, higher markdowns and shift in the mix of merchandise sold to lower margin categories. We believe this weakness should continue in the quarters ahead due to recurrence of the above factors through fiscal 2013 as well as the ongoing consolidation of World Market and Linen Holdings.

Earnings Whispers?

Our proven model does not conclusively show that Bed Bath & Beyond 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 #1, #2 or #3 for this to happen. This is not the case here, as you will see below.

Zacks ESP: ESP for Bed Bath & Beyond is 0.00%. This is because the Most Accurate estimate stands at $1.15 cents, which is in line with the Zacks Consensus Estimate.

Zacks Rank #4 (Sell): Bed Bath & Beyond’s Zacks Rank #4 when combined with a negative ESP makes surprise prediction difficult. We caution against stocks with a Zacks Ranks #4 and #5 (Sell rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Stocks that Warrant a Look

Here are some other companies you may want to consider as our model shows they have the right combination of elements:

American Express Company (AXP - Analyst Report) has an Earnings ESP of +1.59% and a Zacks Rank #2 (Buy).

Dollar Tree Inc. (DLTR - Analyst Report) has an Earnings ESP of +2.80% and a Zacks Rank #3 (Hold).

Macy's Inc. (M - Analyst Report) has an Earnings ESP of +1.84% and a Zacks Rank #3 (Hold).

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