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What's in Store for Companhia Brasileira's (CBD) Q4 Earnings?

Zacks Equity Research

Companhia Brasileira de Distribuicao CBD or Grupo Pao de Acucar is scheduled to release fourth-quarter 2018 results on Feb 20. The company has underperformed the Zacks Consensus Estimate by average of 12.6% over the trailing four quarters. Let’s see how it is positioned ahead of the upcoming quarterly results.

Companhia Brasileira de Distribuicao Price and EPS Surprise

Companhia Brasileira de Distribuicao Price and EPS Surprise | Companhia Brasileira de Distribuicao Quote

What to Expect?

The Zacks Consensus Estimate has gone up by 20% in the past 30 days to 30 cents, which also reflects a considerable rise from the year-ago quarter’s figure. However, the consensus mark for revenues is $3,694 million, depicting a drop of 4.1% from $3,853 million in the year-ago period.

Factors Setting the Tone

Companhia Brasileira is set to continue gaining from strength of its Assai division, which has long been a growth driver. During the third quarter, gross sales at this segment rallied 25.5% in local currency. Sturdy growth was driven by higher comps and store openings. Moreover, gross margin grew 80 basis points (bps), courtesy of store-expansion efforts and higher conversions. Management’s focus on making constant investments in this segment clearly reflects robust prospects for the company.

Notably, Companhia Brasileira recently came out with fourth-quarter 2018 sales results, wherein same-store sales increased 6.9%, which is considerably above the inflation level. Results were largely driven by strong performance in December. Further, both Assai and Multivarejo depicted solid growth, with the latter gaining from continued growth in sales volume and traffic. Additionally, a highly diversified portfolio, omnichannel activities and robust digital endeavors aided sales growth.  Clearly, these factors position the company well for the fourth-quarter earnings release.

Apart from this, Companhia Brasileira focuses on its strategy for 2018-2020, which aims at delivering solid food segment performance. The company plans to achieve this by utilizing its multi-network and multi-format existence to offer consumers innovative services and products. Further, the company’s core growth plans involve continued organic expansion and store optimization; enhancing retail format offerings and extending offerings of financial services (particularly at Assai). All these factors along with Companhia Brasileira’s pilot projects make us optimistic about its upcoming earnings release.

What the Zacks Model Unveils

Our proven model doesn’t show a beat for Companhia Brasileirathis earnings season. For this to happen, a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Though Companhia Brasileira carries a Zacks Rank #2, its Earnings ESP of 0.00% makes surprise prediction difficult.

Retail 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 earnings beat:

Foot Locker FL has an Earnings ESP of +2.78% and a Zacks Rank of 2.  You can see the complete list of today’s Zacks #1 Rank stocks here.

Five Below NWL, a Zacks #2 Ranked stock, has an Earnings ESP of +0.45%.

Walmart WMT, a Zacks #3 Ranked company, has an Earnings ESP of +5.55%.

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