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Discount Retail Stocks' Nov 22 Earnings Lineup: DLTR & BURL

DLTR BURL

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With the third-quarter earnings season almost nearing its end, the focus has largely shifted to the Retail sector. Retailers operating brick-and-mortar stores have been witnessing a decline in footfall due to the increasing preference for online purchases. Nonetheless, higher consumer spending might help the retail sector to witness an improvement in the coming quarters.

Per our Earnings Preview report as of Nov 18, earnings for the total S&P 500 companies will improve 3.6% from the year-ago period, with total revenue rising 1.5%.

As per the report, out of the 476 S&P 500 companies that have come up with their quarterly numbers, approximately 73.1% posted positive earnings surprises, while 55.5% beat top-line expectations. Total earnings for these index members were up 4% from the year-ago quarter, while revenues increased 2.6%.

Out of 36 retail companies on the S&P 500 index (43 in total), 61.1% have posted an earnings beat, while 44.4% surpassed revenue estimates. While total earnings for these 36 retailers were up 7.4% from the year-ago quarter, revenues increased 4.9%.

So, let’s see what awaits the following discount retail stocks that are queued up for third-quarter earnings releases on Nov 22.

Dollar Tree, Inc. (DLTR - Free Report) has missed the Zacks Consensus Estimate by an average of 0.6% in the trailing four quarters.

DOLLAR TREE INC Price and EPS Surprise

 

DOLLAR TREE INC Price and EPS Surprise | DOLLAR TREE INC Quote

Our proven model does not conclusively show that Dollar Tree is likely to beat earnings estimates in third-quarter fiscal 2016. 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.

Dollar Tree currently has an Earnings ESP of 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 78 cents. It carries a Zacks Rank #3.

While a favorable Zacks Rank increases the predictive power of ESP, a 0.00% ESP makes surprise prediction difficult.

While the incorporation of Family Dollar is expected to generate synergies in the long run, increased costs and cannibalization will likely continue affecting results throughout the integration and re-banner process. Further, foreign currency headwinds remain a concern. (Read more: Dollar Tree Q3 Earnings: Can It Reverse the Trend?)

Next, let’s take a sneak peek at Burlington Stores, Inc. (BURL - Free Report) , which outperformed the Zacks Consensus Estimate in all of the trailing four quarters by an average of 16.1%.

BURLINGTON STRS Price and EPS Surprise

 

BURLINGTON STRS Price and EPS Surprise | BURLINGTON STRS Quote

This off-price apparel and home product retailer has an Earnings ESP of +6.06% as the Most Accurate estimate is at 35 cents while the Zacks Consensus Estimate is pegged at 33 cents. Also, it carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

The ensuing positive earnings ESP and the company’s Zacks Rank #2 make us reasonably confident of an earnings beat for Burlington Stores in third-quarter fiscal 2016.

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