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Citi Trends Inc. (CTRN - Analyst Report), a value-priced retailer of urban fashion apparel and accessories, is slated to report its second-quarter fiscal 2014 results on Aug 20, 2014. In the last quarter, it posted a negative surprise of 17.3%. Let’s see how things are shaping up for this announcement.

Growth Factors This Quarter

We believe that Citi Trends’ earnings for the trailing 2 quarters (fourth quarter fiscal 2013 and first quarter fiscal 2014) has been riding on turnaround strategies such as better utilization of floor area, improvisation of merchandise margins and efficient inventory management. Moreover, the company expects these strategic initiatives to drive sales improvement throughout fiscal 2014. Though the company typically posts negative earnings for the second and third quarters, we remain optimistic about the upcoming results given the above mentioned turnaround initiatives.

Earnings Whispers

Our proven model does not conclusively project Citi Trends as likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for this to happen. This is not the case here as you will see below.

Zacks ESP:  ESP for Citi Trends is 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate projects a loss of 29 cents.

Zacks Rank: Citi Trends carries a Zacks Rank #1 (Strong Buy) which increases the predictive power of ESP. However, we need to have a positive ESP to be confident of an earnings surprise call.

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

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows these to have the right combination of elements to post an earnings beat:  

Abercrombie & Fitch Co. (ANF - Analyst Report) has an Earnings ESP of +20.00% and a Zacks Rank #2 (Buy).

GameStop Corp. (GME - Analyst Report) has an Earnings ESP of +10.53% and a Zacks Rank #3 (Hold).

Dollar Tree Inc. (DLTR - Analyst Report) has an Earnings ESP of +7.69% and a Zacks Rank #3.

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