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Factors Likely to Impact Children's Place (PLCE) Q2 Earnings

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We expect The Children's Place, Inc. PLCE to register a year-over-year decline in its top and bottom lines, when it reports second-quarter fiscal 2020 numbers. The Zacks Consensus Estimate for fiscal second quarter is pinned at a loss of $1.34. The company had reported earnings per share of 19 cents in the year-earlier quarter. The current consensus estimate got wider than a loss of $1.28 pegged 30 days ago. For revenues, the consensus mark stands at $368.4 million, suggesting a decline of 12.4% from the year-ago quarter’s tally.

However, the children's apparel retailer has a trailing four-quarter earnings surprise of 11.3%, on average.

Key Factors

We expect the company’s second-quarter performance to have bore the brunt of coronavirus. In fact, temporary closures of stores at some point in the quarter are likely to have weighed on performance. In addition, any deleverage in SG&A expenses remains a concern. Moreover, higher penetration of the company’s e-commerce business and increased fulfillment costs coupled with an aggressive promotional environment might have put pressure on gross margin in the to-be-reported quarter.

Amid the coronavirus pandemic, many retailers are benefiting from the e-commerce business, and so is Children's Place. During its last earnings call, the company stated that in the second quarter through Jun 11, online demand soared 300%. Management has been making investments to upgrade the omni-channel capabilities as part of its Digital Transformation strategy. The company has also been implementing ship-from-store capabilities across its stores to meet the surging online demand amid the pandemic. The e-commerce business might have offset the downside to some extent in the quarter.

What the Zacks Model Says

Our proven model doesn’t conclusively predict an earnings beat for Children's Place this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

The Childrens Place, Inc. Price and EPS Surprise

The Childrens Place, Inc. Price and EPS Surprise
The Childrens Place, Inc. Price and EPS Surprise

The Childrens Place, Inc. price-eps-surprise | The Childrens Place, Inc. Quote

Children's Place has an Earnings ESP of +19.64% and a Zacks Rank #5 (Strong Sell).

Stocks With Favorable Combinations

Here are a few companies worth considering from the same sector as our model shows that these have the right combination of elements to beat on earnings:

Dollar General DG presently has an Earnings ESP of +6.88% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Big Lots BIG currently has an Earnings ESP of +5.04% and a Zacks Rank #3.

Lowe's LOW has an Earnings ESP of +4.41% and a Zacks Rank #3.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

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