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Here's How Stitch Fix (SFIX) Looks Just Ahead of Q4 Earnings

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Stitch Fix, Inc. (SFIX - Free Report) is scheduled to report fourth-quarter fiscal 2020 numbers on Sep 22, after market close. The Zacks Consensus Estimate for fiscal fourth quarter is pegged at a loss of 18 cents, which got wider from a loss of 17 cents over the past seven days. Also, the estimate compares unfavorably with earnings of 7 cents reported in the year-ago quarter. Moreover, the consensus mark for quarterly revenues stands at $415.3 million, which suggests decrease of about 4% from the year-ago quarter’s tally.

We note that this online personal-styling service company has delivered an earnings surprise of 43.8% in the past four quarters, on average.

Key Factors at Play

Stitch Fix has been grappling with higher SG&A expenses for a while. Any deleverage in the same might have shown on the company’s bottom line in the fiscal fourth quarter. Moreover, the company has been making investments toward business operations and infrastructure to boost clients’ experience. Management still forecasts a total investment of $25-35 million for fiscal 2020 for the U.K. merchandise, styling and operations. In addition, a heightened promotional backdrop and impacts of the coronavirus pandemic remain other deterrents.

Nonetheless, management, at its third-quarter earnings call on Jun 8, informed that the company has been witnessing improvement in net merchandise revenue. This reflected resilience in its U.S. warehouse network and growth in client command. These trends might have continued in the fiscal fourth quarter. Moreover, it anticipated fourth-quarter gross margin to grow 200-300 basis points quarter over quarter, thanks to a balanced inventory portfolio. Additionally, Stitch Fix’s direct-buy facility, which allows clients to shop and select products directly from the company’s website or mobile app with highly personalized recommendations, has been gaining massive popularity.

What Does the Zacks Model Say?

Our proven model does not conclusively predict a beat for Stitch Fix this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stitch Fix, Inc. Price and EPS Surprise

Stitch Fix, Inc. Price and EPS Surprise

Stitch Fix, Inc. price-eps-surprise | Stitch Fix, Inc. Quote

Stitch Fix has an Earnings ESP of 0.00% and a Zacks Rank #4 (Sell).

Stocks With a Favorable Combination

Here are three companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Darden Restaurants (DRI - Free Report) has an Earnings ESP of +108.96% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Domino's Pizza (DPZ - Free Report) has an Earnings ESP of +4.34% and a Zacks Rank #2.

Costco (COST - Free Report) has an Earnings ESP of +1.20% and a Zacks Rank #3.

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