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Factors Setting the Tone for Hibbett (HIBB) in Q1 Earnings

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Hibbett Sports, Inc. (HIBB - Free Report) is slated to release first-quarter fiscal 2019 results on May 25, before the market opens. The company boasts an impressive earnings surprise history with a beat in each of the last four quarters by an average of 26.1%.

Notably, the Zacks Consensus Estimate for the first quarter is pegged at $1.13, which has been stable in the last 30 days but reflects a year-over-year increase of 16.5%.

Hibbett Sports, Inc. Price, Consensus and EPS Surprise

Hibbett Sports, Inc. Price, Consensus and EPS Surprise | Hibbett Sports, Inc. Quote

Let’s see how things are shaping up prior to this earnings announcement.

Factors Likely to Influence 1Q19

Hibbett’s focus on improving e-commerce penetration and expanding loyalty program is commendable. In fact, the company has been witnessing sturdy results from the re-launch of the loyalty program. Additionally, its marketing initiatives have been boosting sales by improving traffic and increasing loyalty members, besides enhancing product assortments.  While new member sign-ups improved 45% year over year, its rewards program contributed 57% to net sales in the fourth quarter of fiscal 2018.

Meanwhile, Hibbett seems on track with store expansion, inventory management initiatives and omni-channel capabilities. The company is gaining from small market strategy as it continues to strengthen presence across the country. All these strategies are likely to contribute to the company’s first-quarter results.

Notably, analysts surveyed by Zacks expect revenues of $277.3 million, almost flat with the year-ago period.

Robust strategies have also raised investors’ confidence in the stock as it has substantially outperform the industry in the last six months. While, shares of Hibbett have surged 45.5%, the industry gained 7%.

However, the company has been grappling with strained margins for a while now. Increased promotions and markdowns undertaken to clear inventory along with higher e-commerce penetration led to the margin contraction. Additionally, higher SG&A expenses have been weighing on the operating margin. We note that fourth-quarter fiscal 2018 was the sixth straight quarter when both gross and operating margins contracted.

Moreover, management stated that fiscal 2019 started one week later due to the additional 53rd week last year. Consequently, it expects quarterly total revenues and earnings to be hurt by the week shift, particularly in the second and third quarter of fiscal 2019.

What the Zacks Model Unveils

Our proven model does not show that Hibbett 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.

Though Hibbett’s Zacks Rank #3 increases the predictive power of earnings beat, its Earnings ESP of -5.92% makes surprise prediction difficult.

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:

Urban Outfitters, Inc. (URBN - Free Report) has an Earnings ESP of +2.52% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
 
Dollar General Corp. (DG - Free Report) has an Earnings ESP of +2.45% and a Zacks Rank of 2.

American Eagle Outfitters, Inc. (AEO - Free Report) has an Earnings ESP of +0.14% and a Zacks Rank #3.

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