The last few weeks of first-quarter earnings season has been dominated by retailers, from Target (TGT - Free Report) to Macy’s (M - Free Report) . This trend is set to continue, so Zacks has investors covered with three retail stocks that look poised to top quarterly earnings estimates.
The retail industry has been under pressure not only from Amazon (AMZN - Free Report) and other online sellers but also from investors. Clothing retailer Gap (GPS - Free Report) , which had been on a strong run over the last year, saw its stock price tumble nearly 14% on Friday after it released lower-than-expected Q1 earnings results Thursday. Therefore, retail investors need to be on the hunt for stocks that look set to top quarterly earnings estimates.
Luckily, Zacks Premium customers can utilize the Earnings ESP Screener in order to search for stocks that are expected to surprise, in one way or the other. This is done because, generally speaking, when an analyst posts an estimate right before an earnings release, it means that they have fresh information which could potentially be more accurate than what analysts thought about a company two or three months ago.
A positive Earnings ESP paired with a Zacks Rank #3 (Hold) or better ranking helps us feel confident about the potential for an earnings beat. In fact, our 10-year backtest has revealed that this methodology has accurately produced a positive surprise 70% of the time.
Today, we are giving our readers a free look at three of these stocks ahead of their upcoming quarterly earnings reports. Check them out now:
1. DSW Inc. (DSW - Free Report)
Shares of DSW have climbed nearly 31% over the year 12 weeks and 14% during the last four weeks, in a sign that investors might be expecting big things from this footwear retailer when it reports its first-quarter earnings results before the opening bell on Wednesday, May 30. DSW’s Q1 revenues are actually expected to slip by 1% from the year-ago period to $684.11 million, based on our Zacks Consensus Estimates.
But top-line growth is not all that matters. The company’s first-quarter earnings are projected to pop by 12.5% to touch $0.36 per share. Meanwhile, DSW’s Most Accurate Estimate—the representation of the most recent analyst sentiment—calls for quarterly earnings of $0.37 per share, which is 1 cent better than our current consensus estimate. The company is also currently a Zacks Rank #3 (Hold) and sports an Earnings ESP of 3.47%. Therefore, investors should consider DSW as a stock that could beat Q1 earnings estimates.
2. Dollar General Corporation (DG - Free Report)
Dollar General stock has surged 33.7% over the last year, yet shares have slipped over 2% in the last four weeks. However, this recent decline doesn’t seem to be based on the off-price retailer’s first-quarter outlook, with Dollar General’s quarterly revenues expected to climb by 10.3% to $6.19 billion. Moving on to the other end of the income statement, DG is projected to touch $1.40 per share, which would mark a nearly 36% surge from the prior-year period.
DG is also currently a Zacks Rank #2 (Buy) and rocks an earnings ESP of 0.95%. The company’s Most Accurate Estimate comes in at $1.41 per share, coming in 1 cent above our current consensus estimate. This means that Dollar General might be able to impress investors with a bottom line beat when it reports its Q1 financial results before the market opens on Thursday, May 31.
3. Lululemon Athletica Inc. (LULU - Free Report)
Shares of this upscale athleisure giant have skyrocketed over 118% over the last year and 31% during the last 12 weeks. Lululemon’s quarterly revenues are projected to climb by 18.45% to touch $616.32 million. Investors should also be very excited to see that LULU’s earnings are expected soar 40.63% to hit $0.45 per share.
Lululemon is also currently a Zacks Rank #3 (Hold), with an Earnings ESP of 0.29%. LULU’s Most Accurate Estimate also currently sits 1 cent above our current consensus estimate. Therefore, as investors know at this point, Lululemon could top earnings estimates when it reports its Q1 financial results after market close on Thursday, May 31.
For more retailer earnings previews, make sure to check out: Upcoming Earnings Reports to Watch: CRM, COST, ULTA
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