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Will Limited Brands' Earnings Beat Estimate?

Zacks Equity Research

L Brands, Inc. (LTD), a specialty retailer of women’s intimate and other apparel, beauty and personal care products, is set to report its first-quarter fiscal 2013 results on May 22. In the last quarter it posted a positive surprise of 1.2%. Let’s see how things are shaping up for this announcement.

Growth Factors this Past Quarter

Limited Brands’ sustained focus on cost containment, inventory management, and merchandise initiatives have kept it afloat in a sluggish consumer environment. The company’s Bath & Body Works segment is gaining traction, driven by a rise in store transactions, enhancement in the direct channel business and growth in new stores. Victoria’s Secret Stores has been performing well and the company is also revamping its La Senza brand.

Earnings Whispers?

Our proven model does not conclusively show that Limited Brands is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP (Read: Zacks Earnings ESP: A Better Method)and a Zacks Rank of #1, #2 or #3 for this to happen. This is not the case here as you will see below.

Zacks ESP: ESP for Limited Brands is 0.00%. This is because the Most Accurate Estimate stands at 46 cents, which is in line with the Zacks Consensus Estimate.

Zacks Rank #3 (Hold): Limited Brands’ Zacks Rank #3 (Hold) lowers the predictive power of ESP because the Zacks Rank #3 when combined with a 0.00% ESP makes surprise prediction difficult. We caution against stocks with Zacks Ranks #4 and #5 (Sell rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat:

Flowers Foods, Inc. (FLO) with an Earnings ESP of +9.38% and a Zacks Rank #1 (Strong Buy).

J&J Snack Foods Corp. (JJSF) with an Earnings ESP of +0.90% and a Zacks Rank #2 (Buy).

ConAgra Foods, Inc. (CAG) with an Earnings ESP of +1.70% and a Zacks Rank #3 (Hold).

Read the Full Research Report on LTD

Read the Full Research Report on CAG

Read the Full Research Report on JJSF

Read the Full Research Report on FLO

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