OfficeMax Incorporated is slated to report its first-quarter 2013 results on May 7, 2013. In the last quarter, it posted a positive surprise of 6.7%. Let’s see how things are shaping up for this announcement.
Growth Factors this Past Quarter
OfficeMax is repositioning itself to keep afloat in a difficult consumer environment. The company is containing costs, closing underperforming stores and focusing on providing innovative products and services, which should all contribute to margin improvement. OfficeMax intends to focus more on improving sales per square foot through an increase in customer traffic and converting them into potential buyers by targeted advertising, ongoing sales training and customer-oriented initiatives.
Our proven model does not conclusively show that OfficeMax is likely to beat earnings this quarter. This 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. This is not the case here as you will see below.
Negative Zacks ESP: ESP for OfficeMax is -4.35%. This is because the Most Accurate Estimate stands at 22 cents, while the Zacks Consensus Estimate is pegged at 23 cents.
Zacks Rank #4 (Sell): OfficeMax’s Zacks Rank #4 (Sell) lowers the predictive power of ESP because the Zacks Rank #4 when combined with a negative ESP 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 to post an earnings beat this quarter:
Campbell Soup Company (CPB - Analyst Report), Earnings ESP of +1.79% and a Zacks Rank #2 (Buy)
J&J Snack Foods Corp. (JJSF - Snapshot Report), Earnings ESP of +0.90% and a Zacks Rank #2 (Buy)
The Gap, Inc. (GPS - Analyst Report), Earnings ESP of +3.51% and a Zacks Rank #2 (Buy).