The Children's Place, Inc. (PLCE - Free Report) is scheduled to report third-quarter fiscal 2018 results on Dec 6. In the last reported quarter, the company’s earnings surpassed the Zacks Consensus Estimate by 22.8%. Also, the company outperformed the Zacks Consensus Estimate in three of the trailing four quarters by an average of 3.3%. Let’s see what awaits this quarterly release.
How are Estimates Faring?
The Zacks Consensus Estimate for third-quarter earnings is pegged at $3.00 per share, reflecting an increase of 16.3% from $2.58 reported in the year-ago quarter. However, the consensus mark has declined by 2 cents over the past 30 days. The Zacks Consensus Estimate for revenues stands at $501.6 million, up about 2.4% from the year-ago quarter’s tally.
Children's Place, Inc. (The) Price, Consensus and EPS Surprise
Factors That Hold Key to Children's Place Q3 Performance
Children's Place is leaving no stone unturned to boost top line and expand customer base. The company is focusing on digital transformation to provide a hassle-free shopping experience. It had earlier stated plans to invest about $50 million in SG&A over the next three years to support digital transformation. The company expects to generate 35% of total revenues from its digital channel by 2020.
Further, Children's Place is taking steps not only to gain traction in the U.S. market, but also to expand globally. This is evident from its license agreement with Zhejiang Semir Garment Co. Ltd (Semir) for the Greater China market, which covers Mainland China, Taiwan, Hong Kong and Macau. Semir is the parent company of Balabala — a prominent name in China’s specialty children’s apparel retail industry.
Moreover, the company has rolled out Wi-Fi, "BOPIS" (Buy Online, Pick Up in Store), Ship from Store and mobile POS to all its U.S. stores. Further, the company launched SMS texting capabilities and implemented everyday free shipping with no minimum purchase. Children's Place is also implementing “BOSS” (Buy Online, Ship to Store).
However, Children's Place is witnessing higher cost of sales and SG&A expenses for a while now, which had weighed on the bottom line in the fiscal second quarter. Moreover, stiff competition and aggressive promotional environment remain as headwinds.
Nevertheless, the company recently informed that comps have improved in high single digit during the third quarter. Moreover, it reiterated third-quarter earnings projection of $2.97-$3.07 per share.
What the Zacks Model Unveils
Our proven model does not conclusively show that Children's Place 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.
Although Children's Place has a Zacks Rank #2, its Earnings ESP of -4.77% makes surprise prediction difficult.
Stocks With Favorable Combination
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 earnings beat.
Boot Barn Holdings (BOOT - Free Report) has an Earnings ESP of +6.85% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Zumiez Inc. (ZUMZ - Free Report) has an Earnings ESP of +0.69% and a Zacks Rank #3.
The Kroger Co. (KR - Free Report) has an Earnings ESP of +0.58% and a Zacks Rank #3.
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