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Can Guess? (GES) Spring a Surprise this Earnings Season?
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Guess?, Inc. (GES - Free Report) is set to report second-quarter fiscal 2018 results on Aug 23 after the market closes. The question lingering in investors’ minds is, whether this apparel retailer will be able to post a positive earnings surprise in the to-be-reported quarter. The company delivered an average earnings beat of 33.03%, despite missing the consensus mark twice in the trailing four quarters. Consequently, the dismal performance weighed upon the stock and is clearly reflected in its share prices.
We note that in the last six months, shares of this retailer have declined 2.7%, compared with the industry’s growth of 11.7%. Notably, the industry is part of the top 33% of the Zacks Classified industries (87 out of the 265). The broader Consumer Discretionary sector, which is at top 31% of the Zacks Classified sectors (5 out of 16), has also increased 4.8% in the said time frame.
Let us see how things are shaping up for this announcement.
Which Way are Estimates Treading?
Let’s look at earnings estimate revisions in order to get a clear picture of what analysts are thinking about the company right before the earnings release. The current Zacks Consensus Estimate for the quarter under review has remained unchanged over the last seven days and is currently pegged at 10 cents per share, down 30.4% from 14 cents per share delivered in the year-ago quarter. Analysts polled by Zacks expect revenues of $559.1 million, up 2.6% from the prior-year period.
Our proven model does not conclusively show that Guess? is likely to beat earnings estimates this quarter. This is because a stock needs to have both a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP for this to happen. You may uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Guess? has an Earnings ESP of 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 10 cents per share. The company currently carries a Zacks Rank #3, which increases the predictive power of ESP. However, its ESP of 0.00% makes surprise prediction difficult.
Factors Influencing the Quarter
For second-quarter fiscal 2018, management expects consolidated net revenues to improve 2-4%. Excluding the impact of currency, consolidated net revenues are anticipated to grow 3.5-5.5% on a constant-currency basis. Moreover, the company’s adjusted as well as GAAP operating margin is projected in the band of 2.2-3%. Adjusted as well as GAAP earnings per share for the second quarter are forecasted in the range of 8-11 cents. Currency is likely to have a negative impact of 4 cents per share.
Guess? is struggling with waning comps in the North American Retail segment. Comps declined 4.9%, 2%, 4% and 7%, respectively in the four quarters of fiscal 2017, while it declined 15% in first-quarter fiscal 2018, due to tough retail environment. Further, foreign currency is putting pressure on the company’s sales. In the Americas, the company expects to remain focused on profitability improvements, backed by plans of rent reductions and closing underperforming stores, but the turnaround might take some time. Nevertheless, the company expects improvement in both Europe and Asia as the company continues its retail expansion there.
Meanwhile, the company also expects to implement supply chain initiatives to drive profit improvement in fiscal 2018. Although it is taking several cost-cutting initiatives, higher promotional environment and competitive retail environment are putting strain on gross margins.
Stocks with Favorable Combination
Here are some companies in the consumer discretionary sector you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
Malibu Boats, Inc. (MBUU - Free Report) has an Earnings ESP of +2.50% and a Zacks Rank #1.
Vail Resorts, Inc. (MTN - Free Report) has an Earnings ESP of +1.09% and a Zacks Rank #3.
4 Surprising Tech Stocks to Keep an Eye on
Tech stocks have been a major force behind the market’s record highs, but picking the best ones to buy can be tough. There’s a simple way to invest in the success of the entire sector. Zacks has just released a Special Report revealing one thing tech companies literally cannot function without. More importantly, it reveals 4 top stocks set to skyrocket on increasing demand for these devices. I encourage you to get the report now – before the next wave of innovations really takes off.
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Can Guess? (GES) Spring a Surprise this Earnings Season?
Guess?, Inc. (GES - Free Report) is set to report second-quarter fiscal 2018 results on Aug 23 after the market closes. The question lingering in investors’ minds is, whether this apparel retailer will be able to post a positive earnings surprise in the to-be-reported quarter. The company delivered an average earnings beat of 33.03%, despite missing the consensus mark twice in the trailing four quarters. Consequently, the dismal performance weighed upon the stock and is clearly reflected in its share prices.
We note that in the last six months, shares of this retailer have declined 2.7%, compared with the industry’s growth of 11.7%. Notably, the industry is part of the top 33% of the Zacks Classified industries (87 out of the 265). The broader Consumer Discretionary sector, which is at top 31% of the Zacks Classified sectors (5 out of 16), has also increased 4.8% in the said time frame.
Let us see how things are shaping up for this announcement.
Which Way are Estimates Treading?
Let’s look at earnings estimate revisions in order to get a clear picture of what analysts are thinking about the company right before the earnings release. The current Zacks Consensus Estimate for the quarter under review has remained unchanged over the last seven days and is currently pegged at 10 cents per share, down 30.4% from 14 cents per share delivered in the year-ago quarter. Analysts polled by Zacks expect revenues of $559.1 million, up 2.6% from the prior-year period.
Guess?, Inc. Price, Consensus and EPS Surprise
Guess?, Inc. Price, Consensus and EPS Surprise | Guess?, Inc. Quote
What Does the Zacks Model Unveil?
Our proven model does not conclusively show that Guess? is likely to beat earnings estimates this quarter. This is because a stock needs to have both a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP for this to happen. You may uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Guess? has an Earnings ESP of 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 10 cents per share. The company currently carries a Zacks Rank #3, which increases the predictive power of ESP. However, its ESP of 0.00% makes surprise prediction difficult.
Factors Influencing the Quarter
For second-quarter fiscal 2018, management expects consolidated net revenues to improve 2-4%. Excluding the impact of currency, consolidated net revenues are anticipated to grow 3.5-5.5% on a constant-currency basis. Moreover, the company’s adjusted as well as GAAP operating margin is projected in the band of 2.2-3%. Adjusted as well as GAAP earnings per share for the second quarter are forecasted in the range of 8-11 cents. Currency is likely to have a negative impact of 4 cents per share.
Guess? is struggling with waning comps in the North American Retail segment. Comps declined 4.9%, 2%, 4% and 7%, respectively in the four quarters of fiscal 2017, while it declined 15% in first-quarter fiscal 2018, due to tough retail environment. Further, foreign currency is putting pressure on the company’s sales. In the Americas, the company expects to remain focused on profitability improvements, backed by plans of rent reductions and closing underperforming stores, but the turnaround might take some time. Nevertheless, the company expects improvement in both Europe and Asia as the company continues its retail expansion there.
Meanwhile, the company also expects to implement supply chain initiatives to drive profit improvement in fiscal 2018. Although it is taking several cost-cutting initiatives, higher promotional environment and competitive retail environment are putting strain on gross margins.
Stocks with Favorable Combination
Here are some companies in the consumer discretionary sector you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
Churchill Downs, Incorporated (CHDN - Free Report) has an Earnings ESP of +3.23% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Malibu Boats, Inc. (MBUU - Free Report) has an Earnings ESP of +2.50% and a Zacks Rank #1.
Vail Resorts, Inc. (MTN - Free Report) has an Earnings ESP of +1.09% and a Zacks Rank #3.
4 Surprising Tech Stocks to Keep an Eye on
Tech stocks have been a major force behind the market’s record highs, but picking the best ones to buy can be tough. There’s a simple way to invest in the success of the entire sector. Zacks has just released a Special Report revealing one thing tech companies literally cannot function without. More importantly, it reveals 4 top stocks set to skyrocket on increasing demand for these devices. I encourage you to get the report now – before the next wave of innovations really takes off.
See Stocks Now>>