Hanesbrands Inc. HBI is set to report fourth-quarter 2015 results on Feb 4, after the market closes. Last quarter, the company posted a positive earnings surprise of 11.11%. The company has delivered positive surprises in two of the trailing four quarters and in-line earnings in the remaining two, making it for an average positive surprise of 3.47%.

Let's see how things are shaping up for this announcement.

Factors to Consider

Hanesbrands expects to report fourth quarter earnings in the range of 44 to 46 cents and expects sales to be $1.52 billion. Operating profit is likely to range within $231 million to $241 million.

We note that Hanesbrands has been posting decent results for the past few quarters backed by strategic acquisitions and the success of the Innovate-to-Elevate strategy. The high-margin products that the strategy focuses on should expand fourth-quarter margins as well.

Strong sales growth in most of its segments, especially the Activewear and International segments helps the company boost its top line. Further, acquisitions such as Knights Apparel and DBApparel are driving sales for the sports apparel company.

The company also carries on consistent innovations to maintain its market share and a loyal customer base. Hanesbrands’ strong e-Commerce business, products and strategic buyouts help it to maintain the top line at decent levels.

However, currency has been hurting revenues for the past few quarters and the trend is likely to persist in the fourth quarter as well. Limited international exposure and excessive focus on premium brands also remain threats for the company.

Earnings Whispers

Our proven model does not conclusively show that Hanesbrands is likely to beat earnings this quarter. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to surpass earnings estimate. However, that is not the case here due to the following factors:

Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 46 cents. Hence, the difference is 0.00%.

Zacks Rank: Hanesbrands’ Zacks Rank #2 (Buy) when combined with a 0.00% ESP makes surprise prediction difficult.

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 momentum.

Stocks to Consider

Here are some companies in the broader consumer discretionary stocks that you may consider as our model shows that they have the right combination of elements to post an earnings beat this quarter: