Citi Trends, Inc. (CTRN Quick QuoteCTRN - Free Report) , the leading value-priced retailer of urban fashion apparel and accessories, is set to report fourth-quarter fiscal 2016 results on Mar 10. The question lingering in investors’ minds now is whether the company will be able to post a positive earnings surprise in the to-be-reported quarter. Citi Trends had posted a negative earnings surprise of 300% in the fiscal third quarter. Moreover, the company has missed the Zacks Consensus Estimate in three of the trailing four quarters, with an average of 63.0%. Let’s see how things are shaping up prior to this announcement.

A look at Citi Trends’ share price movement in the past six months reveals that the stock has not only underperformed the Zacks categorized Retail – Apparel/Shoe industry, but also the broader sector. In the said period, the stock has declined 15.3%, while the industry fell 12.9%. On the other hand, the broader Retail-Wholesale sector of which they are part of, gained 1.5% over the same time frame.

Per the latest Earnings Outlook, we note that the Retail-Wholesale sector’s earnings are estimated to rise 1.3%, whereas revenues are projected to improve 4.3%.

What Does the Zacks Model Unveil?

Our proven model does not conclusively show that Citi Trends is likely to beat earnings estimates this quarter. This is because a stock needs to have both a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP for this to happen. You may uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Citi Trends has an Earnings ESP of 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 36 cents. Moreover, the company carries a Zacks Rank #4 (Sell). We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
    
Factors Influencing the Quarter

On Feb 8, Citi Trends came out with fourth-quarter and fiscal 2016 sales results that lagged analysts’ expectations. Moreover, we noticed that the Zacks Consensus Estimate for both fourth-quarter and fiscal 2016 has declined by a penny to 36 cents and 90 cents, respectively, in the past 30 days. (Read: Citi Trends' Q4 & FY16 Sales Lag; Declares Dividend)

We noted that Citi Trends had also delivered dismal results for the third quarter, wherein both the top line and bottom line fell short of the Zacks Consensus Estimate.

Additionally, the seasonal nature of Citi Trends’ business exposes it to the risk of failing to perform well in the peak season. The company typically generates stronger sales during the first and fourth quarters, which are characterized by the spring and holiday seasons. Moreover, the ever changing consumer tastes and preferences, along with intense competition, remain threats to the company.

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:

Tailored Brands, Inc. has an Earnings ESP of +9.09% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Fred's, Inc. has an Earnings ESP of +21.05% and a Zacks Rank #3.

Constellation Brands, Inc. (STZ Quick QuoteSTZ - Free Report) has an Earnings ESP of +2.94% and a Zacks Rank #3.

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