Back to top

Things You Need to Know Before DSW's (DSW) Q4 Earnings

Read MoreHide Full Article

DSW Inc. (DSW - Free Report) is likely to register a decline in the bottom line when this renowned footwear and accessories retailer reports fourth-quarter fiscal 2018 numbers. This is in sharp contrast with its prior quarters. Notably, this Ohio-based company had reported higher earnings in the preceding four quarters and also comfortably surpassed the Zacks Consensus Estimate during those periods.

Drawing focus back on the to-be-reported fourth quarter, the Zacks Consensus Estimate for earnings in the fiscal fourth quarter stands at 3 cents, which reflects a significant decline from 38 cents reported in the year-ago period. We also note that the Zacks Consensus Estimate has gone down by 3 cents in the past 60 days. The Zacks Consensus Estimate for revenues is $849 million, up approximately 17.9% from $720 million in the year-ago quarter. 

DSW Inc. Price and EPS Surprise

Factors Aiding the Stock

DSW has been witnessing healthy comparable sales (comps) for quite some time now. Notably, comps rose 10% and 7% in the second and third quarters of fiscal 2018. Further, the company remains focussed on its digital marketing efforts along with its VIP rewards program which are likely to drive traffic. We believe that these customer centric strategies will aid the company’s top line in the to-be reported quarter.

Going into fiscal 2019, DSW revenues are expected to increase 12-14%, while .comps are projected to rise in the mid to high-single-digit range However, during the fourth-quarter fiscal 2018 comps might be affected by calendar shift although it is expected to remain decent in the said period. We note that the Zacks Consensus Estimate for comps for US Retail and ABG segments are pegged at growth of 5.4% and 3% in the fourth quarter, respectively..

Moreover, with the addition of Camuto Group, DSW is touted to become one of the largest footwear companies in North America. Further, the deal is expected to boost DSW’s revenues by providing it with a larger market. On the flip side, the acquisition is expected to reduce fourth quarter earnings by 5-10 cents. The company anticipates bottom line to range between a loss of 9 cents to earnings of 6 cents per share in the fourth quarter. Adjusted earnings for fiscal 2018 is projected to be $1.70-$1.85 per share.

Zacks Model

Our proven model doesn’t show that DSW is likely to beat bottom-line estimates this quarter. For this to happen, a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Although DSW currently carries a Zacks Rank #1, its Earnings ESP of 0.00% making surprise prediction difficult. 

Stocks Poised to Beat Earnings Estimates

Here are a few companies you may want to consider as our model shows that they have the right combination to post an earnings beat:

Zumiez, Inc. (ZUMZ - Free Report) has an Earnings ESP of +0.18% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Bed Bath & Beyond (BBBY - Free Report) has an Earnings ESP of +2.07% and a Zacks Rank #2.

Foot Locker (FL - Free Report) has an Earnings ESP of +2.78% and a Zacks Rank #2.

Zacks' Top 10 Stocks for 2019

In addition to the stocks discussed above, wouldn't you like to know about our 10 finest buy-and-holds for the year?

From more than 4,000 companies covered by the Zacks Rank, these 10 were picked by a process that consistently beats the market. Even during 2018 while the market dropped -5.2%, our Top 10s were up well into double-digits. And during bullish 2012 – 2017, they soared far above the market's +126.3%, reaching +181.9%.

This year, the portfolio features a player that thrives on volatility, an AI comer, and a dynamic tech company that helps doctors deliver better patient outcomes at lower costs.

See Stocks Today >>

In-Depth Zacks Research for the Tickers Above

Normally $25 each - click below to receive one report FREE:

Zumiez Inc. (ZUMZ) - free report >>

Foot Locker, Inc. (FL) - free report >>

DSW Inc. (DSW) - free report >>

Bed Bath & Beyond Inc. (BBBY) - free report >>

More from Zacks Analyst Blog

You May Like