What Awaits Bed Bath & Beyond (BBBY) In Q1 Earnings?

Bed Bath & Beyond Inc. (NASDAQ:BBBY) is slated to release first-quarter fiscal 2016 results on Jun 22. Last quarter, the company had delivered a positive earnings surprise of 6.1%. In fact, it has outperformed the Zacks Consensus Estimate by an average of 1.3% over the trailing four quarters. Let’s see how things are shaping up for this announcement.

Factors Influencing this Quarter

Though Bed Bath & Beyond boasts a positive earnings history, the company’s results continued to be impacted by foreign currency headwinds in the last quarter. Also, margins remained pressurized, on account of soft merchandise margins and a rise in selling, general and administrative (SG&A) expenses. The company expects these factors to linger in the future and therefore, anticipates gross margin and SG&A expense deleverage in fiscal 2016. We expect the pressurized margins and higher expenses to dent the company’s bottom line, thus posing a further concern. Also, persistence of these unfavorable currency fluctuations remains a threat. Together, these factors make us cautious of the upcoming results.

Earnings Whispers

Our proven model does not conclusively show that Bed Bath & Beyond 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 Bed Bath & Beyond is currently pegged at -3.49%. This is because the Most Accurate estimate of 83 cents stands below the Zacks Consensus Estimate of 86 cents.

Zacks Rank: Bed Bath & Beyond carries a Zacks Rank #4 (Sell). 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 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:

Lithia Motors Inc. (NYSE:LAD) , expected to report earnings on Jul 27, has an Earnings ESP of +2.04% and a Zacks Rank #3 (Hold).

AutoNation, Inc. (NYSE:AN) , expected to report earnings on Jul 27, has an Earnings ESP of +0.95% and a Zacks Rank #3.

Blue Nile Inc. (NASDAQ:NILE) , expected to report earnings on Aug 5, has an Earnings ESP of +5.00% and a Zacks Rank #3.

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