Over halfway through the third-quarter earnings season, reports from 66.4% of the S&P 500 companies are already out as of Nov 1 (per the latest Earnings Outlook report). The outcome of the season so far has painted a decent growth picture, breaking the five-quarter-long lackluster trend. Clearly, this period is quite significant with both earnings and revenues on the growth trajectory.

Per the latest report, out of the 332 S&P 500 companies that have come up with their quarterly numbers, approximately 72.9% posted positive earnings surprises, while 55.4% beat top-line expectations. Also, according to the report, earnings for the 332 S&P 500 companies that have reported so far are up 1.9% from the same period last year, while revenues have increased 1.3%.
    
Out of the 16 Zacks sectors deciding the fate of the index, the Consumer Discretionary sector has a sizeable chunk of companies that are yet to come up with their earnings reports. This sector, which houses numerous apparel and shoe stocks, appears well placed even in the face of economic challenges.

Notably, the apparel industry is constantly grappling with issues like competition and declining footfall. Here, change is the only thing constant and players are under perennial pressure to strike the right chord with fashion-conscious consumers. Meanwhile, an increasing number of customers are resorting to online shopping, which has dealt a major blow to apparel retailers who are dependent on mall traffic to drive growth.

About 45.7% of the S&P 500 companies in the Consumer Discretionary sector have reported results as of Nov 1. Of these, 62.5% delivered an earnings beat and 43.8% cruised ahead of revenue estimates, despite these obstacles. Moreover, the top and bottom lines of these members jumped 8.0% and 7.1% year over year, respectively. So, let’s see if the following apparel stocks that are expected to report earnings on Nov 3, can add a leaf to the Consumer Discretionary sector’s growth story.  

To start with Gildan Activewear Inc. (GIL Quick QuoteGIL - Free Report) , we are unsure whether this manufacturer and marketer of premium quality branded basic active wear will be able to post a positive earnings surprise when it reports third-quarter 2016 results. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here as the company’s Most Accurate Estimate of 50 cents stands below the Zacks Consensus Estimate of 51 cents, thereby generating an Earnings ESP of -1.96%. Please check our Earnings ESP Filter  that enables you to find stocks that are expected to come out with earnings surprises.

Also, the company currently carries a Zacks Rank #4 (Sell). We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Further, let’s take a sneak peek at Sequential Brands Group, Inc. , a licensing and brand management company focused on promoting, marketing and licensing a portfolio of consumer brand. The company’s current Earnings ESP is pegged at 0.00%. This is because both its estimates stand at 11 cents. The company currently carries a Zacks Rank #3.You can see the complete list of today’s Zacks #1 Rank stocks here.

We note that while a favorable Zacks Rank #3 increases the predictive power of ESP, a 0.00% ESP makes surprise prediction difficult.

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