For Immediate Release
Chicago, IL – May 22, 2017 –Zacks Equity Research Children's Place, Inc. (NASDAQ: PLCE – Free Report ) as the Bull of the Day, Urban Outfitters, Inc. (NASDAQ: URBN – Free Report ) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Best Buy Co., Inc. (NYSE: BBY – Free Report ), Fred's, Inc. (NASDAQ: FRED – Free Report ) and Ulta Beauty, Inc. (NASDAQ: ULTA – Free Report ).
Here is a synopsis of all five stocks:
Bull of the Day :
The Children's Place, Inc. (NASDAQ:PLCE – Free Report ) appears to be the only mall-based retailer that isn't just surviving, but is thriving. This Zacks Rank #1 (Strong Buy) just had a blowout first quarter and raised full year guidance.
The Children's Place sells children's apparel at retail and wholesale at 1033 stores in the US, Canada, Puerto Rico and online at the childrensplace.com. It also has 156 international points of distribution operated by 6 franchise partners in 18 countries.
Another Beat in the First Quarter
On May 18, The Children's Place reported its first quarter results and blew by the Zacks Consensus Estimate by 30 cents, or 18%. It reported earnings of $1.95 compared to the consensus of just $1.65.
The beat shouldn't have been that much of a surprise, as the company has one of the most consistent beat records in the retail industry. It hasn't missed on the earnings in 5 years.
Bear of the Day :
Urban Outfitters, Inc. (NASDAQ:URBN – Free Report ) continues to struggle as it missed on the apparel mix at one of its most popular brands. This Zacks Rank #5 (Strong Sell) saw another quarter of declining same store sales.
Urban Outfitters operates three well known apparel and accessory brands: Urban Outfitters, Anthropologie and Free People. It operates 242 Urban Outfitters across the US, Canada and Europe; 225 Anthropologie stores in the United States, Canada and Europe; and 130 Free People stores in the United States and Canada.
It also operates websites and catalogs for all three brands. ADditionally it has 12 Food and Beverage restaurants.
Free People also sells its product wholesale, through 1,900 department and specialty stores and third-party websites.
A Miss in the First Quarter
On May 16, Urban Outfitters reported fiscal first quarter 2018 results and missed on the Zacks Consensus by 3 cents. Earnings were $0.13 versus the consensus of $0.16.
But the earnings miss or beat isn't the whole story with the retailers. It's really about the comparable store sales but those weren't good either.
Comparable store sales fell 3.1%. This included the online sales.
Only Free People saw a gain, as comparables rose 1.5%, but they declined 3.1% at Urban Outfitters and 4.4% at Anthropologie. Anthropologie has been its weakest performing segment for the last several quarters.
This quarter, the problem wasn't that they got the trend wrong, as they invested heavily in the onesies and rompers, which did sell well. But they cut back on dresses, among their most expensive apparel item, so that meant sales were soft in that category.
Additionally, the company said they didn't offer enough work clothes or dressier clothes for going out. While athleisure has been hot for several years, that doesn't mean women wear it 24/7.
Estimates Slashed for F2018 and F2019
The analysts are bearish on Urban Outfitters over the next two years. Getting the trends correctly, and doing it quarter after quarter, is proving to be difficult for all but the most skilled retailers in the apparel group.
13 estimates were cut for fiscal 2018 since the earnings report. That pushed the Zacks Consensus Estimate down to $1.52 from $1.73. The company made $1.86 last year, so that's an earnings decline of 18.2%.
Ten analysts also cut the fiscal 2019 estimates, sending the Zacks Consensus Estimate down to $1.63 from $1.86.
Is a Q1 Earnings Beat in the Cards for Best Buy (BBY)?
Best Buy Co., Inc. (NYSE:BBY – Free Report ) is slated to report first-quarter fiscal 2018 results on May 25. In the previous quarter, the company exceeded the Zacks Consensus Estimate by 17.5%. Notably, it has surpassed earnings estimates in the trailing four quarters, with an average beat of 27.7%. Let’s see how things are shaping up prior to this announcement.
What to Expect?
The question lingering in investors’ minds now is whether Best Buy will be able to post positive earnings surprise in the quarter to be reported. The current Zacks Consensus Estimate for the quarter under review is 40 cents, reflecting a year-over-year decrease of nearly 9%. We noted that the Zacks Consensus Estimate has witnessed upward revisions in the last 30 days. Analysts polled by Zacks expect revenues of $8,264 million, down about 2% from the year-ago quarter.
Factors at Play
Best Buy has been posting better-than-expected results in the last 17 quarters and the trend is expected to continue in first-quarter fiscal 2018 as well. Sound promotional strategies, continuous optimization of merchandise margins as well as robust expense management have been driving the company’s earnings. Moreover, Best Buy is making extensive investments to upgrade operations with special focus on developing omni-channel capabilities and strengthening partnership with vendors.
In the past few quarters, the company had reported massive gain in online comparable sales on the back of improved traffic, conversion rates and higher average order values, which is expected to boost results in the quarter to be reported.
For first-quarter fiscal 2018, management forecasts Enterprise revenues between $8.2 billion and $8.3 billion, and comparable sales decline of 1–2%. Management also projects earnings in the range of 30–40 cents a share. Also in the fiscal first quarter, the company anticipates domestic comparable sales to fall in the range of 1.5–2.5%, while international comparable sales are projected to be in the range of flat to up 3%. However, the challenging retail landscape, aggressive promotional strategies and waning store traffic may hurt the stock.
What the Zacks Model Unveils
Our proven model shows that Best Buy is likely to beat earnings estimates this quarter. 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. The Most Accurate estimate stands at 44 cents, while the Zacks Consensus Estimate is pegged at 40 cents. So the ensuing difference – the Earnings ESP – is of +10.00%. A positive ESP combined with the company’s Zacks Rank #2, makes us reasonably confident of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter .
Other Stocks Poised to Beat Earnings Estimates
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 an earnings beat:
Fred's, Inc. (NASDAQ: FRED – Free Report ) has an Earnings ESP of +16.67% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here .
Ulta Beauty, Inc. (NASDAQ: ULTA – Free Report ) has an Earnings ESP of +0.56% and a Zacks Rank #3.
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About the Bull and Bear of the Day
Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.
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Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Strong Stocks that Should Be in the News
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