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hhgregg Inc (HGG - Analyst Report) is set to report its fiscal third quarter 2013 results on Jan 31. Last quarter it posted a surprise of +22.22%. Let’s see how things are shaping up for this announcement.

Factors to Consider

hhgregg has been facing disappointing results in the video category since last few quarters due to fundamental shifts in the video category and lower-than-expected margins across all screen sizes. In addition, declining industry demand for flat screen televisions severely impacted overall store traffic and video category sales. Moreover, promotional activities or product innovation within the video category has further declined the gross profit margin rate for the video category and the total company gross margin rates. Though hhgregg has also been testing new merchandise categories to improve overall mix in the video category, we continue to expect sluggish performance in the video category.

As announced in preliminary results, the company expects its earnings, sales as well as comparable sales to decline in the third quarter, due to sluggish performance in the video category. The company has also slashed its fiscal 2013 guidance on the back of its weak preliminary third quarter results.

Earnings Whispers?

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

Zacks ESP: That is because the Most Accurate estimate and the Zacks Consensus Estimate both stand at $0.52, which results in ESP of 0.00%.

Zacks Rank #5 (Strong Sell): We caution investors against this stock as it carries a Zacks Rank #5 (Strong Sell). The stock is unlikely to beat earnings this quarter with an earnings ESP of 0.00% along with a Zacks Rank #5 (Strong Sell).

Other Stocks to Consider

Here are some other companies in the retail and wholesale sector you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter: 

Abercrombie & Fitch Co (ANF - Analyst Report), Earnings ESP of +7.25% and Zacks Rank #1 (Strong Buy)

Urban Outfitters Inc (URBN - Analyst Report), Earnings ESP of +1.82% and Zacks Rank #2 (Buy).

Pricesmart Inc (PSMT - Snapshot Report), Earnings ESP of +3.80% and Zacks Rank #3 (Hold)

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