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Wet Seal Inc. (WTSL - Analyst Report) is set to report its fourth quarter fiscal 2013 results on Mar 21. Last quarter, it posted a loss of 11 cents; narrower than the Zacks Consensus Estimate of a loss of 13 cents per share. Let’s see how things are shaping up for this announcement.

Growth Factors this Past Quarter

Wet Seal posted a loss of 11 cents per share compared with earnings of 5 cents per share in the year ago quarter due to lower comparable store sales and spending by domestic customers.

Wet Seal’s sales came down 10.9% in the quarter due to lower sales at both Arden B and Wet Seal stores. Although management is working to improve sales and increase penetration in the e-commerce business, higher costs related to incremental marketing expenses and macroeconomic headwinds are expected to adversely affect comps even during the fourth quarter.

Earnings Whispers?

The Zacks Consensus Estimate for the fourth quarter stands at a loss of 6 cents while that for fiscal 2013 is pegged at a loss of 22 cents.

Wet Seal surpassed the estimates in all the preceding four quarters with a trailing four-quarter average positive surprise of 15.4%.

One out of four estimates was revised upward in the last 60 days. However, the Zacks Consensus Estimate has remained unchanged for the fourth quarter as well as for 2013. The lack of movement in estimates indicates a lack of catalysts during the quarter, meaning that the company is likely to report in line with expectations.

Moreover, the stock carries a Zacks Rank #3 (Hold).

We caution against stocks with Zacks Ranks #4 and #5 (Sell rated stocks) going into the earnings announcement, especially when the company is seeing a negative estimate revision momentum.

Other Stocks to Consider

Our model states that a stock needs to have both a positive earnings ESP (Read: Zacks Earnings ESP: A Better Method) and a Zacks Rank of #1, #2 or #3 to beat earnings estimates. You could, therefore, consider stocks like:

Hanesbrands Inc. ( HBI ) , with Zacks Earnings ESP of 3.03% and a Zacks Rank #2 (Buy); General Mills Inc. ( GIS ) with Zacks Earnings ESP of 1.75% and a Zacks Rank #3 (Hold) and New York & Company Inc. (NWY - Snapshot Report) with Zacks Earnings ESP of 12.5% and a Zacks Rank #2 (Buy).

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