DICK'S Sporting Goods Inc. DKS is slated to release first-quarter fiscal 2016 results on May 19. Last quarter, the company had delivered a negative earnings surprise of 1.7%. In fact, the company has underperformed the Zacks Consensus Estimate by an average of 0.3% over the trailing four quarters. Let’s see how things are shaping up for this announcement.
Factors Influencing this Quarter
Though DICK'S Sporting has delivered lower-than-expected sales and earnings for two quarters now, it plans to make strategic investments in fiscal 2016, to solidify its position in the market and set the stage for 2017 and beyond. These initiatives are expected to boost fiscal 2016 earnings by nearly $50–$55 million. Also, the company’s omni-channel network, effective marketing and merchandising initiatives and customer-oriented strategies bode well. However, vulnerability to sluggish economic recovery and stiff competition remain concerns.
Considering all the factors, the company had earlier projected earnings per share in the band of 48–50 cents for the first quarter, while comparable store sales growth is likely to range from flat to 1%.
Earnings Whispers
Our proven model does not conclusively show that DICK'S Sporting is likely to beat earnings 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: Earnings ESP for DICK'S Sporting is currently pegged at -6.00%. This is because the Most Accurate estimate of 47 cents stands below the Zacks Consensus Estimate of 50 cents.
Zacks Rank: DICK'S Sporting’s Zacks Rank #3 (Hold) increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.
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 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:
Best Buy Co., Inc. BBY, which is scheduled to release earnings on May 24, 2016, currently carries a Zacks Rank #2 (Buy) and an Earnings ESP of +2.94%.
DSW Inc. DSW, slated to release earnings on May 24, 2016, currently carries a Zacks Rank #3 and an Earnings ESP of +2.17%.
PVH Corp. PVH, slated to release earnings on May 25, 2016, currently carries a Zacks Rank #3 and an Earnings ESP of +1.40%.
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