Will Bebe Stores (Bebe) Disappoint Again In Q4 Earnings?

Bebe Stores Inc. (NASDAQ:BEBE) is slated to report fourth-quarter fiscal 2016 results on Sep 1, after the closing bell. In the last quarter, the company delivered a negative earnings surprise of 90.9%.

In fact, the company has underperformed the Zacks Consensus Estimate by an average of 23.3% in the trailing four quarters. Let’s see how things are shaping up for this announcement.

Factors Influencing This Quarter

The company’s third-quarter results reflected significant progress in its restructuring initiatives including headcount reductions and closing of underperforming stores. The costs arising from these actions hurt the company’s performance in the preceding quarter. Moreover, going into the fourth quarter, the company continues to streamline its production cycles, improve in-store assortments, rationalize store fleet and keep a check on discretionary spending.

Consequently, the company provided a dismal guidance for the fourth quarter and fiscal 2016. It expects comparable sales for the fourth quarter to fall in the mid to high single digit range, along with a loss per share of 8–12 cents. Thus, we are not very optimistic about the company’s upcoming results.

Earnings Whispers

Our proven model does not conclusively show that Bebe Stores is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below.

Zacks ESP: Earnings ESP for Bebe Stores is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are at a loss of 7 cents.

Zacks Rank: Bebe Stores carries a Zacks Rank #3 (Hold). Though a Zacks Rank #3 increases the predictive power of ESP, the company’s ESP of 0.00% makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into an earnings announcement, especially when the company is witnessing negative estimate revisions.

Stocks That Warrant a Look

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

Francesca's Holdings Corporation (NASDAQ:FRAN) , scheduled to report earnings on Sep 7, has an Earnings ESP of +11.11% and a Zacks Rank #2 (Buy).

Casey's General Stores Inc. (NASDAQ:CASY) , expected to report earnings on Sep 13, has an Earnings ESP of +0.56% and a Zacks Rank #3.

Fortune Brands Home & Security Inc. (NYSE:FBHS) , expected to report earnings on Oct 19, has an Earnings ESP of +1.30% and a Zacks Rank #2.