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The TJX Companies Inc. (TJX - Analyst Report) is set to report fourth-quarter fiscal 2014 results on Feb 26, before the opening bell. Last quarter, this discount retailer posted a positive surprise of 16.2%. Let us see how things are shaping up prior to the announcement.

Factors to Consider This Quarter

TJX has been posting modest top- and bottom-line results for the past few quarters backed by higher consumer traffic, improved margins and solid comparable-store sales growth for consecutive months.

Although investors are confident of the stock, it is not immune to the macro challenges that have impacted retailers this holiday season. In particular, the inclement weather that gripped northern U.S. during the fourth quarter is a significant headwind. Moreover, a massive ice storm in Europe just prior to Christmas impacted the company’s Home goods and Marmaxx divisions.

Moreover, TJX has been lately focusing on opening stores in off-mall locations enabling it to reach out to a larger consumer base. However, during severe weather conditions, customers prefer enclosed malls. Therefore, we expect TJX’s near-term traffic trends to be affected because of higher off-mall exposure in regions facing severe weather conditions.

Though we are positive on the company’s sound long-term fundamentals, the current scenario is a cause of concern for investors.

As a result of the abovementioned headwinds, other retailers like Kohl’s Corporation (KSS - Analyst Report) trimmed their guidance due to a weak holiday season.

Earnings Whispers?

Our proven model does not conclusively show that TJX is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP:Expected Surprise Prediction or ESP for TJX is -1.21% as the Zacks Consensus Estimate of 83 cents is higher than the Most Accurate estimate of 83 cents per share.

Zacks Rank:TJX’s Zacks Rank #3 (Hold) lowers the predictive power of ESP because the Zacks #3 Rank 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

Other stocks in the retail sector that have both a positive earnings ESP and a favorable Zacks Rank are:

Foot Locker Inc (FL - Snapshot Report), Earnings ESP of +8.00% and a Zacks Rank #2 (Buy).

First Solar Inc. (FSLR - Analyst Report), Earnings ESP of +8.00% and a Zacks Rank #3 (Hold).

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