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The Zacks Analyst Blog Highlights: Kroger, Lumber Liquidators Holdings, Home Depot, Buckle and Central Garden & Pet

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For Immediate Release

Chicago, IL – September 10, 2013 – announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Kroger Co. ((KR - Free Report) -Free Report), Lumber Liquidators Holdings, Inc. ((LL - Free Report) -Free Report), The Home Depot, Inc. ((HD - Free Report) -Free Report), The Buckle, Inc. ((BKE - Free Report) -Free Report) and Central Garden & Pet Company (CENT - Free Report) -Free Report).

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Monday’s Analyst Blog:

Will Kroger (KR - Free Report) Beat Earnings Estimates?

The Kroger Co. ((KR - Free Report) -Free Report) is slated to report its second-quarter fiscal 2013 results on Sep 12, 2013. In the last quarter, it posted a positive surprise of 4.6%. Let’s see how things are shaping up for this announcement.

A dominant position among the nation’s largest grocery retailers enables Kroger to sustain growth in both its top and bottom line, expand its store base, and boost its market share. The company’s strong corporate and national brands helped it gain customer loyalty. These factors, along with the Customer 1st strategy and effective cost management helped the company post better-than-expected results in the last quarter.

The Zacks Consensus Estimate for the second quarter currently stands at 60 cents a share, which rose by a penny in the last 60 days. However, no movement was noticed in the last 7 or 30 days. For fiscal 2013, the Zacks Consensus Estimate is pegged at $2.80 per share, and has not shown any movement over either 7, 30 or 60 days.

Looking at the earnings surprise history of Kroger, this Zacks Rank #2 (Buy) stock has outperformed the Zacks Consensus Estimate in the last 7 quarters by an average of 8.3%.

Our proven model shows that for a stock to beat earnings estimate this quarter, it needs to have a combination of two key components - a positive Earnings ESP (Read: Zacks Earnings ESP: A Better Method) and a Zacks Rank #1, #2 or #3. Stocks with Zacks Rank #1, #2 and #3 have a significantly higher chance of beating earnings estimates. The sell-rated stocks (Zacks Rank #4 and #5) should never be considered going into an earnings announcement.

Other Stocks to Consider

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:

Lumber Liquidators Holdings, Inc. ((LL - Free Report) -Free Report), Earnings ESP of +9.09% and a Zacks Rank #1 (Strong Buy).

The Home Depot, Inc. ((HD - Free Report) -Free Report), Earnings ESP of +1.12% and a Zacks Rank #2 (Buy).

The Buckle, Inc. ((BKE - Free Report) -Free Report), Earnings ESP of +1.10% and a Zacks Rank #3 (Hold).

Bearish View on Central Garden

On Sep 3, we downgraded our long-term recommendation on Central Garden & Pet Company (CENT - Free Report) -Free Report) to Underperform based on the company’s dismal third-quarter 2013 performance. The stock currently carries a Zacks Rank #5 (Strong Sell).

Why the Downgrade?

Estimates for Central Garden & Pet have shown a downtrend since the company reported disappointing third-quarter results on Aug 7, 2013.

The company’s dismal performance continued even in the third quarter. The quarterly earnings of 28 cents a share missed the Zacks Consensus Estimate of 42 cents by miles and plunged 40.4% year over year. Top line also decreased 7% year over year to $494.1 million and fell short of the Zacks Consensus Estimate of $525 million. Decline in both Pet and Garden segments and tough year-over-year comparisons were to blame. Lower sales led to a fall in consolidated gross profit.

We observe that the Central Garden & Pet’s transformation activities are failing to show the desired results and therefore we remain skeptical about the future prospects of the company as the lack of improvement is dashing all hopes of recovery, at least in the near term. The company’s poor performance is evident from its earnings surprise history.

The company has missed the Zacks Consensus Estimate in the trailing 4 quarters by an average of 16.5%, which is a matter of concern. The lower-than-expected results triggered a downtrend in the Zacks Consensus Estimate, as analysts become less constructive on the stock’s future performance. This is evident from the movement witnessed in the Zacks Consensus Estimate that dipped 35.9% to 25 cents for 2013 and 8.1% to 57 cents a share for 2014 in the past 60 days.

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.
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