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Analyst Blog

Staples, Inc. (SPLS - Free Report) is scheduled to report third-quarter fiscal 2016 results on Nov 17. In the previous quarter, the company had reported in-line earnings. 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 Staples is likely to beat 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. Staples has an Earnings ESP of -2.94%, as the Most Accurate estimate stands at 33 cents, while the Zacks Consensus Estimate is pegged higher at 34 cents.

The company carries a Zacks Rank #4 (Sell), which when combined with ESP of -2.94%, makes an earnings surprise minimal. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Factors Influencing This Quarter

Stiff competition, soft international sales and sluggish demand for paper-based office products due to technological advancements remain major concerns for Staples. The company’s cost cutting and other initiatives hold promise in the long run but not in the short term, as reflected by management’s cautious stance. For fiscal third-quarter 2016, the company anticipates sales to fall from the level recorded in the prior-year quarter. Adjusted earnings per share is projected in the range of 32–35 cents.

Moreover, sluggish international sales continue to concern Staples. During first and second quarters of fiscal 2016, revenues from international operations declined 5.6% and 7.5%, respectively, reflecting lower comps in Europe. International sales were soft owing to a weak macroeconomic environment, particularly in Europe. Though European restructuring is on track, intensifying currency headwinds might prove to be a drag.

STAPLES INC Price, Consensus and EPS Surprise

STAPLES INC Price, Consensus and EPS Surprise | STAPLES 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:

Burlington Stores, Inc. (BURL - Free Report) has an Earnings ESP of +6.06% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Dave & Buster's Entertainment, Inc. (PLAY - Free Report) has an Earnings ESP of +15.39% and a Zacks Rank #3.

Express Inc. (EXPR - Free Report) has an Earnings ESP of +16.67% and a Zacks Rank #3.

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