L Brands, Inc. (NYSE:LB) , a specialty retailer of women’s intimate and other apparel, beauty and personal care products, is slated to report second-quarter fiscal 2016 results on Aug 17. The question lingering in investors’ minds is whether the company will be able to deliver a positive earnings surprise in the quarter to be reported. In the trailing four quarters, it outperformed the Zacks Consensus Estimate by an average of 4%. Let’s see how things are shaping up for this announcement.
Zacks Model Shows Likely Earnings Beat
Our proven model shows that L Brands is likely to beat earnings estimates this quarter. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. The Most Accurate estimate stands at 60 cents and the Zacks Consensus Estimate is pegged at 59 cents. So the ensuing +1.70% ESP and the company’s Zacks Rank #3 (Hold) make us reasonably confident of an earnings beat.
Factors Influencing this Quarter
We believe that L Brands’ sustained focus on cost containment, inventory management, merchandise, and speed-to-market initiatives has kept it afloat in a sluggish consumer environment. Moreover, it commands a market-leading position in the lingerie, personal care and beauty segments. We believe that the company’s innovations in merchandise and exclusive assortments remain popular among consumers, thereby setting it apart from peers. L Brands now envisions second-quarter fiscal 2016 adjusted earnings at the high end of its previously issued guidance range of 50−60 cents a share.
However, given the competitive retail landscape, the aggressive promotional strategies undertaken to gain market share may weigh upon the company’s margins in the quarter to be reported. Moreover, foreign currency headwinds may play spoilsport.
L BRANDS INC Price, Consensus and EPS Surprise
L BRANDS INC Price, Consensus and EPS Surprise | L BRANDS INC Quote
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 an earnings beat:
Hibbett Sports, Inc. (NASDAQ:HIBB) has an Earnings ESP of +7.14% and a Zacks Rank #2 (Buy).
Lowe's Companies, Inc. (NYSE:LOW) has an Earnings ESP of +2.13% and a Zacks Rank #2.
Best Buy Co., Inc. (NYSE:BBY) has an Earnings ESP of +7.14% and a Zacks Rank #2.
LOWES COS (LOW): Free Stock Analysis Report
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L BRANDS INC (LB): Free Stock Analysis Report
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