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Michael Kors Holdings Limited (KORS - Analyst Report), the marketer, distributor and retailer of branded women’s apparel and accessories, and men’s apparel, is slated to report its fourth-quarter fiscal 2014 results on May 28, 2014. In the last quarter, it posted a positive surprise of 29.07%. Let’s see how things are shaping up for this announcement.

Factors Influencing This Quarter

There is a cautious stance regarding gross margin, going forward. Although margins are currently very high, it is likely to face markdowns leading to normalizations. We believe that though no striking slowdowns will occur, the company could suffer from an intense promotional backdrop, which is assumed to prevail over a long term in the retail sector.

Earnings Whispers?

Our proven model does not conclusively show that Michael Kors 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 Michael Kors is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 68 cents a share.

Zacks Rank #3 (Hold): Though Michael Kors’ Zacks Rank #3 increases the predictive power of ESP, the company’s ESP of 0.00% makes surprise prediction difficult. 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.

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:

Skechers USA Inc. (SKX - Analyst Report) has an Earnings ESP of +12.20% and a Zacks Rank #1 (Strong Buy).

Sanderson Farms, Inc. (SAFM - Snapshot Report) has an Earnings ESP of +2.44% and a Zacks Rank #1.

Lions Gate Entertainment Corp. (LGF - Analyst Report) has an Earnings ESP of +2.56% and a Zacks Rank #3.

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