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Citi Trends (CTRN) Q3 Earnings: What's in Store this Time?

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Citi Trends Inc. is slated to report third-quarter fiscal 2016 results on Nov 22, before the opening bell. In the last quarter, the company reported a positive surprise of 80%.

However, this off-price apparel retailer missed the Zacks Consensus Estimate in three of the last four quarters. The company has delivered an average negative earnings surprise of nearly 13% in the trailing four quarters. Let’s see how things are shaping up for this announcement.

CITI TRENDS INC Price and EPS Surprise



Factors Influencing this Quarter

Citi Trends is likely to benefit from its strategies like better utilization of floor area, improvisation of merchandise margins and efficient inventory management, which have been aiding it to turn its operating performance around. Further, the company is currently testing its website, which reflects its focus on capturing eCommerce business. Apart from this, it boasts healthy financials and cash flow generation ability.

Going forward, the company anticipates a robust sales trend with persistent development in its home business mix and improvements to apparel variety. While the company expects average units sold to remain pressurized through the rest of fiscal 2016, sales are anticipated to hold up strong due to an uptrend in the number of transactions. Further, the initial third-quarter comps and inventory positions keep the company optimistic of a solid performance in the quarter.

However, the seasonal nature of Citi Trends’ business exposes it to the risk of failing to perform well in the peak season. The company typically generates stronger sales during the first and fourth quarters, which are characterized by the spring and holiday seasons. Moreover, the ever changing consumer tastes and preferences remain a threat.

With all these factors at play, we would like to wait and see what’s in store for Citi Trends for the upcoming release.

Earnings Whispers

Our proven model does not conclusively show that Citi Trends is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below:

Zacks ESP: Earnings ESP for Citi Trends is currently pegged at 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 3 cents. You may uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Citi Trends carries a Zacks Rank #3 (Hold), which increases the predictive power of ESP. However, the company’s ESP of 0.00% makes surprise prediction difficult.

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

Stocks that Warrant a Look

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 this quarter:

Best Buy Co. Inc. (BBY - Free Report) , scheduled to report earnings on Nov 17, currently has an Earnings ESP of +4.26% and Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Dollar Tree Inc. (DLTR - Free Report) , expected to report earnings on Nov 22, currently has an Earnings ESP of +1.28% and a Zacks Rank #3.

Burlington Stores Inc. (BURL - Free Report) , expected to report earnings on Nov 22, currently has an Earnings ESP of +6.06% and a Zacks Rank #3.

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