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Macy's (M) Q3 Earnings: Can the Stock Pull a Surprise?

COT HIBB M KORS

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Macy's, Inc. (M - Free Report) , one of the leading department store retailers, is slated to report third-quarter fiscal 2016 results on Nov 10. The question lingering in investors’ minds now is, whether the company will be able to continue with its positive earnings surprise streak in the quarter to be reported. In the preceding four quarters, Macy's outperformed the Zacks Consensus Estimate by an average of 16.3%. Let’s see how things are shaping up for this announcement.

Zacks Model Shows Unlikely Earnings Beat

Our proven model does not conclusively show that Macy's is likely to beat earnings estimates this quarter. 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. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Macy's has an Earnings ESP of 0.00% as the Most Accurate estimate and the Zacks Consensus Estimate both stand at 41 cents. Macy's Zacks Rank #2 increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.

Factors Influencing this Quarter

We believe Macy’s sustained focus on price optimization, inventory management, merchandise planning and private label offering act as the primary catalysts. In an attempt to augment sales, profitability and cash flows, the company has been taking steps such as integration of operations as well as development of its eCommerce business and Macy’s Backstage off-price business. Further, it is carrying out the expansion of Bluemercury and online order fulfillment centers.

However, a competitive retail landscape, a mature domestic market and cautious consumer spending continue to pose concerns. Moreover, Macy’s dwindling top- and bottom-line results remain the primary concern for investors. A look at the company’s performance in fiscal 2015 unveils that net sales declined 0.7%, 2.6%, 5.2% and 5.3% in the first, second, third and fourth quarters, respectively. Maintaining the same chronological order, we note that earnings per share fell 6.7%, 20%, 8.2% and 14.3%, respectively. In fiscal 2016, net sales decreased 7.4% and 3.9% in the first and second quarters, while earnings per share plunged 28.6% and 15.6% during the respective quarters.

MACYS INC Price, Consensus and EPS Surprise

MACYS INC Price, Consensus and EPS Surprise | MACYS INC Quote

Stocks Poised to Beat Earnings Estimates

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

Hibbett Sports Inc. (HIBB - Free Report) currently has an Earnings ESP of +4.00% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Michael Kors Holdings Limited (KORS - Free Report) has an Earnings ESP of +1.14% and a Zacks Rank #3.

Cott Corporation (COT - Free Report) has an Earnings ESP of +16.67% and a Zacks Rank #3.

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