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Things You Must Know Ahead of Michaels' (MIK) Q2 Earnings

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The Michaels Companies, Inc. (MIK - Free Report) is slated to report second-quarter fiscal 2020 results on Sep 3, before the opening bell. The company reported a loss per share in the last reported quarter, which substantially missed the Zacks Consensus Estimate. Moreover, its bottom line missed estimates by 128%, on average, in the trailing four quarters.

The Zacks Consensus Estimate for the company’s fiscal second-quarter loss is pegged at 7 cents, which suggests a significant decline from earnings of 16 cents reported in the year-ago quarter. Notably, the consensus mark has been unchanged in the past 30 days. The consensus estimate for fiscal second-quarter sales is pegged at $1,001 million, indicating a 3.2% decline from the prior-year quarter’s reported number.

Key Factors to Note

On the last reported quarter’s earnings call, Michaels expected the uncertain impacts of the ongoing COVID-19 outbreak to hurt results in quarters ahead. Hence, it did not provide any guidance for fiscal 2020. Notably, the company’s performance in the to-be-reported quarter is likely to have been hurt by a soft top line. Additionally, a dismal margin trend and a rise in costs related to the impacts of the COVID-19 outbreak are likely to have acted as deterrents.

The Michaels Companies, Inc. Price and EPS Surprise

 

The Michaels Companies, Inc. Price and EPS Surprise

The Michaels Companies, Inc. price-eps-surprise | The Michaels Companies, Inc. Quote

However, the company has made significant transformations by enhancing digital and other omni-channel capabilities. Additionally, it has been witnessing encouraging trends at the reopened stores.  As of the June end, the company reopened 1,273 stores.

Moreover, the company’s solid online show has been providing cushion to the top line. Notably, the newly-launched delivery options, including curbside pick-up, same day delivery, expanded ship-from-store and BOPIS capabilities, as well as in-app purchases have been driving e-commerce sales. Additionally, management predicted e-commerce sales growth to continue in the fiscal second quarter and beyond.

Also, efforts such as optimizing digital spending, enhancing web capabilities and customizing the website per consumer preferences bode well.

Zacks Model

Our proven model does not conclusively predict an earnings beat for Michaels this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Michaels has a Zacks Rank #4 (Sell) and an Earnings ESP of 0.00%.

Stocks Poised to Beat Earnings Estimates

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

Darden Restaurants, Inc. (DRI - Free Report) presently has an Earnings ESP of +100.00% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

RH (RH - Free Report) currently has an Earnings ESP of +13.47% and a Zacks Rank #2.

Signet Jewelers Limited (SIG - Free Report) has an Earnings ESP of +38.82% and a Zacks Rank #3 at present.

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