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Best Buy Co., Inc. (BBY - Free Report) is slated to report first-quarter fiscal 2018 results on May 25. In the previous quarter, the company exceeded the Zacks Consensus Estimate by 17.5%. Notably, it has surpassed earnings estimates in the trailing four quarters, with an average beat of 27.7%. Let’s see how things are shaping up prior to this announcement.

What to Expect?

The question lingering in investors’ minds now is whether Best Buy will be able to post positive earnings surprise in the quarter to be reported. The current Zacks Consensus Estimate for the quarter under review is 40 cents, reflecting a year-over-year decrease of nearly 9%. We noted that the Zacks Consensus Estimate has witnessed upward revisions in the last 30 days. Analysts polled by Zacks expect revenues of $8,264 million, down about 2% from the year-ago quarter.

Best Buy Co., Inc. Price, Consensus and EPS Surprise

Best Buy Co., Inc. Price, Consensus and EPS Surprise | Best Buy Co., Inc. Quote

Factors at Play

Best Buy has been posting better-than-expected results in the last 17 quarters and the trend is expected to continue in first-quarter fiscal 2018 as well. Sound promotional strategies, continuous optimization of merchandise margins as well as robust expense management have been driving the company’s earnings. Moreover, Best Buy is making extensive investments to upgrade operations with special focus on developing omni-channel capabilities and strengthening partnership with vendors.

In the past few quarters, the company had reported massive gain in online comparable sales on the back of improved traffic, conversion rates and higher average order values, which is expected to boost results in the quarter to be reported.

For first-quarter fiscal 2018, management forecasts Enterprise revenues between $8.2 billion and $8.3 billion, and comparable sales decline of 1–2%. Management also projects earnings in the range of 30–40 cents a share. Also in the fiscal first quarter, the company anticipates domestic comparable sales to fall in the range of 1.5–2.5%, while international comparable sales are projected to be in the range of flat to up 3%. However, the challenging retail landscape, aggressive promotional strategies and waning store traffic may hurt the stock.

What the Zacks Model Unveils

Our proven model shows that Best Buy is likely to beat earnings estimates this quarter. 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. The Most Accurate estimate stands at 44 cents, while the Zacks Consensus Estimate is pegged at 40 cents. So the ensuing difference – the Earnings ESP – is of +10.00%. A positive ESP combined with the company’s Zacks Rank #2, makes us reasonably confident of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Other Stocks Poised to Beat Earnings Estimates

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

Fred's, Inc. (FRED - Free Report) has an Earnings ESP of +16.67% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Ulta Beauty, Inc. (ULTA - Free Report) has an Earnings ESP of +0.56% and a Zacks Rank #3.

Big Lots, Inc. (BIG - Free Report) has an Earnings ESP of +2.00% and a Zacks Rank #3.

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