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What You Should Know Before Stitch Fix's (SFIX) Q2 Earnings

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Stitch Fix, Inc. (SFIX - Free Report) is expected to register an increase in its top line from the year-ago quarter’s reported number when it releases second-quarter fiscal 2022 earnings on Mar 8, after market close. The Zacks Consensus Estimate for quarterly revenues currently stands at $516 million, suggesting a rise of 2.4% from the year-ago quarter’s tally.

However, the Zacks Consensus Estimate for the fiscal second quarter’s loss is pegged at 28 cents, indicating a deterioration from the year-earlier quarter’s loss per share of 20 cents. The consensus estimate has been stable over the past 30 days.

A glimpse of this online personal-styling service provider’s performance shows that it delivered an earnings surprise of 90.7% in the trailing four quarters, on average.

Factors at Play

Continued growth in the active client base is a significant driver for Stitch Fix. SFIX has been experiencing strength across both Fix and Freestyle offerings for a while now. Management rolled out the Freestyle drive that offers quite a distinct shopping experience. This platform allows customers to discover and buy curated items according to their style, preferences, fit and size. Stitch Fix strongly focuses on expanding its digital capabilities and personalized shopping to offer clients the best-in-class service.

Stitch Fix is constantly leveraging product innovation, evolving assortments and using personalized experience to add clients. All these efforts coupled with immense strength across its Women’s, Kids and the U.K. businesses are most likely to have fueled the top-line performance in the to-be-reported quarter. The performance in the fiscal second quarter is also likely to have benefited from a continued expansion of the Fix Preview, which is enhancing clients’ experience. On its last earnings call, management had projected net revenues of $505-$520 million for the fiscal second quarter, suggesting 0-3% growth from the year-ago period’s reported figure.

On the flip side, any deleverage in SG&A expenses might have affected SFIX’s bottom line in the quarter under review. Management has been making investments in business operations, technology and infrastructure for a while. In addition, SFIX continues witnessing higher raw material, shipping and product costs as well as global supply-chain bottlenecks. These factors might dampen the bottom-line results for second-quarter fiscal 2022. For the same quarter, Stitch Fix had earlier guided adjusted EBITDA of a negative $5 million to a positive $5 million with a margin of down 1% to up 1%.

What Does the Zacks Model Say?

Our proven model does not conclusively predict a beat for Stitch Fix 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.

Stitch Fix, Inc. Price and EPS Surprise

Stitch Fix, Inc. Price and EPS Surprise

Stitch Fix, Inc. price-eps-surprise | Stitch Fix, Inc. Quote

Although Stitch Fix currently has a Zacks Rank #3, its Earnings ESP of 0.00% makes surprise prediction difficult.

Stocks With Favorable Combination

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

Casey's General Stores (CASY - Free Report) currently has an Earnings ESP of +5.19% and a Zacks Rank #2. CASY is anticipated to register a top-line increase when it reports third-quarter fiscal 2022 results. The Zacks Consensus Estimate for Casey's General Stores’ revenues is pegged at $3,061 million, indicating a rise of 52.3% from the figure reported in the prior-year quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Casey's General Stores’ quarterly earnings is pegged at $1.45 per share, suggesting an improvement of 39.4% from the year-ago quarter’s reported figure. CASY delivered an earnings beat of 20.1%, on average, in the trailing four quarters.

Dollar General (DG - Free Report) currently has an Earnings ESP of +0.68% and a Zacks Rank #3. DG is likely to register a bottom-line decrease when it reports fourth-quarter fiscal 2021 numbers. The Zacks Consensus Estimate for quarterly earnings per share of $2.56 suggests a fall of 2.3% from the year-ago quarter’s reported figure.

Dollar General’s top line is expected to rise from the year-ago quarter’s reported number. The Zacks Consensus Estimate for quarterly revenues is pegged at $8,701 million, which indicates an improvement of 3.4% from the figure reported in the prior-year quarter. DG has a trailing four-quarter earnings surprise of 8.8%, on average.

lululemon athletica (LULU - Free Report) currently has an Earnings ESP of +0.09% and a Zacks Rank of 3. LULU is expected to register top and bottom-line growth when it reports fourth-quarter fiscal 2021 numbers. The Zacks Consensus Estimate for LULU’s quarterly revenues is pegged at $2.13 billion, suggesting growth of 23.4% from the prior-year quarter’s level.

The Zacks Consensus Estimate for lululemon’s quarterly earnings is pegged at $3.27 per share, suggesting a 26.7% increase from the year-ago period’s reported number. LULU delivered an earnings beat of 21%, on average, in the trailing four quarters.

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