Ascena (ASNA) To Report Q3 Earnings: What's In Store?

Ascena Retail Group Inc. (NASDAQ:ASNA) is slated to report third-quarter fiscal 2016 results on May 31. In the last quarter, the company had delivered a positive surprise, where earnings of 1 cent beat the Zacks Consensus Estimate of breakeven results.

Additionally, Ascena outperformed the Zacks Consensus Estimate by an average of 12.96% over the past four quarters. Let’s see how things are shaping up for this announcement.

Factors Influencing this Quarter

In the previous quarter, the company’s top and bottom lines grew year over year. Gains in the quarter were attributed to contributions from the recently acquired ANN Inc., strength at the LOFT brand and tight inventory management. However, results were impacted by soft performance at the company’s dressbarn brand. Also, integration costs related to the ANN acquisition hurt the bottom line. Nevertheless, the company was encouraged by the improvement at its underperforming Justice brand, which helped boost gross margin.

Going forward, the company remains optimistic about the progress made in reviving its Justice brand, while also remaining confident of performances at maurices and Lane Bryant brands. However, integration costs related to the ANN acquisition will continue to hurt earnings. With these factors at play, we would like to wait and see what is in the store for Ascena in the to-be reported quarter.

Earnings Whispers

Our proven model does not conclusively show that Ascena is likely to beat earnings 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 Ascena is currently pegged at 0.00%. This is because the Most Accurate estimate and the Zacks Consensus Estimate both stand at 13 cents.

Zacks Rank: Ascena carries a Zacks Rank #4 (Sell). We caution against stocks with a Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks that Warrant a Look

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

Nike Inc. (NYSE:NKE) , expected to report earnings on Jun 23, has an Earnings ESP of +2.08% and a Zacks Rank #3 (Hold).

Carnival (LON:CCL) Corp. (NYSE:CCL) , expected to report earnings on Jun 28, has an Earnings ESP of +5.26% and a Zacks Rank #3.

Darden Restaurants Inc. (NYSE:DRI) , expected to report earnings on Jun 28, has an Earnings ESP of +0.93% and a Zacks Rank #3.