Can Hibbett's (HIBB) Q2 Earnings Maintain Positive Trend?

Hibbett Sports, Inc. (NASDAQ:HIBB) is slated to release second-quarter fiscal 2017 results on Aug 19. Last quarter, the company had delivered a positive earnings surprise of 1.7%. In fact, the bottom line has outperformed the Zacks Consensus Estimate for three straight quarters now, with an average beat of 3.9%. Let’s see how things are shaping up for this announcement.

Factors Influencing this Quarter

Hibbett’s solid earnings in the preceding quarter highlight that its merchandising initiatives are gaining traction. Further, the company expects to benefit from its small market strategy as it continues to strengthen its presence across the country. Additionally, management remains optimistic about its digital strategy, which will integrate its stores and digital presence with its customers, in an attempt to boost the top line. These factors, along with Hibbett’s expansion endeavors and financial flexibility bode well for the upcoming results.

However, the company had earlier stated that it expects to incur higher costs in fiscal 2017, attributable to its ongoing omni-channel initiatives. This is likely to dent fiscal 2017 earnings to an extent, thus making us cautious of the upcoming results.

Earnings Whispers

Our proven model does not conclusively show that Hibbett 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 Hibbett is currently pegged at 0.00%. This is because the Most Accurate estimate and the Zacks Consensus Estimate are both pegged at 27 cents.

Zacks Rank: Hibbett’s Zacks Rank #2 (Buy) increases the predictive power of ESP. However, 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 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:

Best Buy Co., Inc. (NYSE:BBY) , scheduled to report earnings on Aug 23, currently has an Earnings ESP of +7.14% and a Zacks Rank #2.

GameStop Corp. (NYSE:GME) , slated to report earnings on Aug 25, currently has an Earnings ESP of +7.14% and a Zacks Rank #2.

DSW Inc. (NYSE:DSW) , slated to report earnings on Aug 30, currently has an Earnings ESP of +6.90% and a Zacks Rank #2.

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