Will Hibbett (HIBB) Disappoint When It Reports Q1 Earnings?

Hibbett Sports Inc. (NASDAQ:HIBB) is slated to release first-quarter fiscal 2018 results on May 18. The big question facing investors is whether this sporting goods retailer will be able to deliver a positive earnings surprise in the quarter to be reported.

Last quarter, the company delivered in-line earnings results. However, the company has an average negative surprise of 1.4% in the trailing four quarters. Let’s see how things are shaping up for this announcement.

Factors Influencing this Quarter

Recently, Hibbett reported soft preliminary results for first-quarter fiscal 2018. The company indicated that it had a soft start to the fiscal first quarter with comparable store sales (comps) falling double-digits in February, mainly due to the delay in tax refunds. However, comps improved significantly in March and through the last week of April, both in the mid-single digit range. Nevertheless, this growth was not enough to offset the decline in February.

The improvement in March and April can be attributed to the solid footwear sales and the successful rollout of the store-to-store/home initiative. This initiative along with robust eCommerce growth is likely to drive comps growth going forward. Further, the company’s stringent focus on expense control is anticipated to boost profitability in the fiscal first quarter.

Based on the soft sales trends, the company anticipates fiscal first-quarter sales to decline about 4–5%. This along with clearance markdowns is likely to result in earnings per share of 94–97 cents per share for the quarter. Further, the company lowered fiscal 2018 earnings per share forecast to $2.35–$2.55, compared with the previous guidance of $2.65–$2.85 per share.

Consequently, the Zacks Consensus Estimates for the first quarter and fiscal 2018 have been witnessing a downtrend ahead of the company’s earnings release. Estimates for the first quarter and fiscal 2017 have declined by 20 cents and 29 cents, respectively, to 95 cents per share and $2.46 per share. The current Zacks Consensus Estimate of 95 cents for the first quarter, reflects a year-over-year decline of nearly 21.7%. Analysts polled by Zacks anticipate revenues of $277.3 million for the fiscal first quarter, reflecting 1.7% decline from the year-ago quarter.

Furthermore, shares of Hibbett have underperformed the broader industry year to date. Hibbett’s shares slumped 34.4%, while the Zacks categorized Retail–Miscellaneous industry dipped 1.9%. All these factors make us cautious on the company’s upcoming earnings release.

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 95 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Hibbett currently carries a Zacks Rank #5 (Strong 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 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:

Home Depot Inc (NYSE:HD) , slated to release earnings on May 16, currently has an Earnings ESP of +0.62% and a Zacks Rank #2 (Buy).

Wal-Mart Stores Inc. (NYSE:WMT) , scheduled to release earnings on May 18, currently has an Earnings ESP of +1.04% and a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Best Buy Co. Inc. (NYSE:BBY) , scheduled to release earnings on May 25, currently has an Earnings ESP of +10.00% and a Zacks Rank #2.

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