Bed Bath & Beyond Inc. BBBY, a specialty retailer of domestic merchandise and home furnishings, is slated to report third-quarter fiscal 2015 results on Jan 7. In the last quarter, the company’s earnings were in line with the Zacks Consensus Estimate. Let’s see how things are shaping up for this announcement.
Factors Influencing This Quarter
Bed Bath & Beyond underperformed the Zacks Consensus Estimate by an average of 0.4% over the past four quarters due to the negative impact of foreign exchange rate fluctuations, particularly on its Canadian operations, along with weak margins. Also, looking ahead, the company expects sales and earnings in fiscal 2015 to bear the brunt of currency headwinds. Further, management recently lowered its third-quarter fiscal 2015 projections, owing to weaker in-store transaction counts as well as overall softness in the retail sector in the quarter.
Consequently, the company now anticipates net earnings per share for the third quarter in the range of $1.07–$1.10, well below its previous estimate of around $1.14–$1.21. Hence, we remain cautious about the upcoming results.
Earnings Whispers
Our proven model does not conclusively show that Bed Bath & Beyond 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, 2 or 3 for this to happen. This is not the case here, as you will see below:
Zacks ESP: Bed Bath & Beyond’s Earnings ESP is currently pegged at 0.00%. This is because the Most Accurate estimate and the Zacks Consensus Estimate both stand at $1.09.
Zacks Rank: Bed Bath & Beyond carries a Zacks Rank #4 (Sell). We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks That Warrant a Look
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:
J. C. Penney Company, Inc. JCP has an Earnings ESP of +30.44% and a Zacks Rank #2 (Buy).
Amazon.com, Inc. AMZN has an Earnings ESP of +1.85% and a Zacks Rank #2.
PriceSmart Inc. PSMT has an Earnings ESP of +1.19% and a Zacks Rank #3 (Hold).
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