Retail Stocks' Earnings On Oct 27: CAB, PSMT, TPX, NSIT

Investors are keeping a close watch on the Q3 earnings season, which so far has recorded positive earnings growth following dismal performance in the five preceding quarters.

Per the Earnings Preview report as of Oct 21, out of the 116 S&P 500 companies that have come up with their quarterly numbers, approximately 80.2% have posted positive earnings surprises, while 62.9% beat top-line expectations. According to the report, earnings for the 116 S&P 500 companies that have reported so far are up 3.3% from the same period last year, while revenues have increased 1.8%.

Further, the report projects that earnings for the total S&P 500 companies will improve 0.1% from the year-ago period, and total revenue will grow 1.5%. Well, as the earnings season gets into groove, the scenario would become clearer. In Q2, earnings of S&P 500 companies declined 2.8% whereas revenues inched up 0.2%.

The performance of the index is not restricted to a single sector, and of the 16 Zacks sectors, seven are expected to witness an earnings decline in the third quarter, with Autos, Oil/Energy and Transportation being a big drag. However, the Retail/Wholesale sector is showing improvement in spite of overseas turmoil, fluctuating commodity prices and the Fed’s pending decision over the rate hike.

Total earnings for the Retail/Wholesale sector are estimated to rise 5.6%, whereas revenues are projected to increase 5.3%.

Among Retail/Wholesale stocks lined up to report, let’s take a sneak peek at four companies slated to release their quarterly numbers on Oct 27.

Cabela's Incorporated (NYSE:CAB) , a specialty retailer and direct marketer of hunting, fishing, camping and related outdoor merchandise, is scheduled to report third-quarter 2016 results. The question lingering in investors’ minds now is whether the company will be able to deliver a positive earnings surprise in the quarter to-be-reported.

Cabela’s multi-channel model, next-generation stores and cost-saving initiatives are likely to have a favorable impact in the quarter to be reported. Moreover, the next-generation stores are outperforming Cabela’s legacy stores in terms of both sales and profit per square foot. However, we remain optimistic about these store formats as they require less capital investment, enhance store productivity and help increase sales per square foot.

Soft economic recovery, deceleration in the sale of sporting goods along with stiff competition from both brick & mortar and eCommerce businesses are making things tough for Cabela’s. Moreover, the company’s expansion in the geographies where it already serves has boomeranged, consequently cannibalizing sales and leading to lower traffic count at existing stores. (Read more: Will Cabela's Earnings Fall Shy of Estimates in Q3?)

Cabela’s carries a Zacks Rank #3 (Hold) and has an Earnings ESP of -1.25%. The Zacks Consensus Estimate for the quarter is pegged at 80 cents. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.

CABELAS INC Price and EPS Surprise

PriceSmart Inc. (NASDAQ:PSMT) which owns and runs membership shopping warehouse clubs in the U.S, Central America, Caribbean and Colombia is scheduled to reports fourth-quarter fiscal 2016 financial numbers. Notably, the company’s earnings have missed the Zacks Consensus Estimate in the trailing three quarters, with an average earnings miss of 10.3%.

Our proven model does not conclusively show that PriceSmart is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 for this to happen. PriceSmart has an Earnings ESP of 0.00% as the Most Accurate estimate and the Zacks Consensus Estimate both stand at 65 cents. The company carries a Zacks Rank #5 (Strong Sell), which decreases the predictive power of ESP.

Tempur Sealy International Inc. (NYSE:TPX) which develops, manufactures, markets as well as distributes bedding products globally with the help of its subsidiaries is slated to release third-quarter 2016 results. In the trailing four quarters, the company’s earnings have surpassed the Zacks Consensus Estimate, with an average earnings beat of 11.9%.

The company’s third-quarter Earnings ESP is 0.00% as the Most Accurate estimate and the Zacks Consensus Estimate both stand at $1.22. The company carries a Zacks Rank #5, which decreases the predictive power of ESP.

Insight Enterprises Inc. (NASDAQ:NSIT) , a worldwide direct marketer of brand name computers, hardware as well as software is scheduled to report third-quarter 2016 results on. The company has an Earnings ESP of 0.00% as both the Zacks Consensus Estimate and the Most Accurate estimate are pegged at 53 cents. It carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

In the previous quarter, the company’s earnings beat the Zacks Consensus Estimate by 29.3%. Moreover, in the trailing two out of the four quarters the company’s earnings have surpassed the estimate.

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