U.S. Markets closed

Will Zumiez (ZUMZ) Beat Earnings?

Zacks Equity Research

We expect Zumiez Inc. (ZUMZ), a Wash.-based retailer of sports-related teen apparel, to beat expectations when it reports second-quarter fiscal 2013 results on Sep 5. In the past quarter, it posted a positive surprise of approximately 8.3% and we believe that the company will beat expectations for this quarter as well.

Why a Likely Positive Surprise?

Our proven model shows that Zumiez may beat earnings because it has the right combination of 2 key components.

Positive Zacks ESP: Zumiez currently has an Earnings ESP (Read: Zacks Earnings ESP: A Better Method) of +5.88%. This is because the Most Accurate Estimate stands at 18 cents per share, while the Zacks Consensus Estimate is pegged at 17 cents.

Zacks #3 Rank (Hold): Note that stocks with a Zacks Rank #1, 2 and 3 have higher chances of beating earnings. The Sell rated stocks (#4 and 5) should never be considered going into an earnings announcement.

The combination of Zumiez’s Zacks Rank #3 (Hold) and Earnings ESP of +5.88% makes us confident of a positive earnings beat on Sep 5.

What is Driving Better-than-Expected Earnings?

Zumiez’s strategy relies on offering action-sports merchandise focused on young men and women in the age of group of 12–24, which has enabled the company to carve a distinct niche for itself. Furthermore, the company’s stores are strategically located in busy areas of the mall, such as food courts, movie theatres and music/game stores, which are frequently visited by its target customers. We also believe that Zumiez’s initiatives such as store opening programs and the acquisition of Blue Tomato has provided it a solid platform to capitalize on the emerging opportunities.

The company has surpassed the Zacks Consensus Estimate in the trailing 4 quarters with an average surprise of approximately 12.6%.

Other Stocks to Consider

Zumiez is not the only firm we are looking up to this earnings season. The following companies are also likely to beat earnings in the to-be-reported quarter:

Buckle Inc. (BKE) with an Earnings ESP of +2.20% and a Zacks Rank #2 (Buy).

Dollar General Corp. (DG) with Earnings ESP of +1.35% and a Zacks Rank #2 (Buy).

Dollar Tree Inc. (DLTR) has an Earnings ESP of +1.70% and a Zacks Rank #3 (Hold).

Read the Full Research Report on DLTR

Read the Full Research Report on ZUMZ

Read the Full Research Report on DG

Read the Full Research Report on BKE

Zacks Investment Research

More From Zacks.com