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Is Staples (SPLS) Likely to Disappoint in Q1 Earnings?
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Staples, Inc. is expected to report first-quarter fiscal 2017 results on May 16. In the previous quarter, the company had reported in-line earnings. Let’s see how things are shaping up prior to this announcement.
What to Expect?
The question lingering in investors’ minds now is whether Staples will be able to post positive earnings surprise in the quarter to be reported. The current Zacks Consensus Estimate for the quarter under review is 17 cents, flat year over year. We note that the Zacks Consensus Estimate have been stable in the last 60 days. Analysts polled by Zacks expect revenues of $4,540 million, declining nearly 11% from the year-ago quarter.
Factors at Play
We believe the decision to streamline operations to enhance productivity and performance in North America by expanding services, strengthening customer base, shutting down underperforming stores and decreasing fixed costs bode well for the company.
However, stiff competition, soft international sales and sluggish demand for paper-based office products due to technological advancements remain major woes for Staples. Decline in sales have also been a concern for the company. We noted that the company’s sales have declined 3.1%, 3.7%, 4.3% and 2.9% in the first, second, third and fourth quarters of fiscal 2016, respectively. Additionally, the company's top line missed the Zacks Consensus Estimate for the second straight time in the fourth quarter.
What Does the Zacks Model Unveil?
Our proven model does not conclusively show that Staples will beat 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 (Hold) for this to happen. Staples has an Earnings ESP of 0.00%, as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 17 cents. The company 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. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
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:
The Home Depot, Inc. (HD - Free Report) has an Earnings ESP of +0.62% and a Zacks Rank #2.
Lowe's Companies, Inc. (LOW - Free Report) has an Earnings ESP of +1.89% and a Zacks Rank #3.
Sell These Stocks
Now. Just released, today's 220 Zacks Rank #5 Strong Sells demand urgent attention. If any are lurking in your portfolio or Watch List, they should be removed immediately. These are sinister companies because many appear to be sound investments. However, from 1988 through 2016, stocks from our Strong Sell list have actually performed 6X worse than the S&P 500
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Is Staples (SPLS) Likely to Disappoint in Q1 Earnings?
Staples, Inc. is expected to report first-quarter fiscal 2017 results on May 16. In the previous quarter, the company had reported in-line earnings. Let’s see how things are shaping up prior to this announcement.
What to Expect?
The question lingering in investors’ minds now is whether Staples will be able to post positive earnings surprise in the quarter to be reported. The current Zacks Consensus Estimate for the quarter under review is 17 cents, flat year over year. We note that the Zacks Consensus Estimate have been stable in the last 60 days. Analysts polled by Zacks expect revenues of $4,540 million, declining nearly 11% from the year-ago quarter.
Factors at Play
We believe the decision to streamline operations to enhance productivity and performance in North America by expanding services, strengthening customer base, shutting down underperforming stores and decreasing fixed costs bode well for the company.
However, stiff competition, soft international sales and sluggish demand for paper-based office products due to technological advancements remain major woes for Staples. Decline in sales have also been a concern for the company. We noted that the company’s sales have declined 3.1%, 3.7%, 4.3% and 2.9% in the first, second, third and fourth quarters of fiscal 2016, respectively. Additionally, the company's top line missed the Zacks Consensus Estimate for the second straight time in the fourth quarter.
What Does the Zacks Model Unveil?
Our proven model does not conclusively show that Staples will beat 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 (Hold) for this to happen. Staples has an Earnings ESP of 0.00%, as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 17 cents. The company 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. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
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:
Best Buy Co., Inc. (BBY - Free Report) has an Earnings ESP of +10.00% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Home Depot, Inc. (HD - Free Report) has an Earnings ESP of +0.62% and a Zacks Rank #2.
Lowe's Companies, Inc. (LOW - Free Report) has an Earnings ESP of +1.89% and a Zacks Rank #3.
Sell These Stocks
Now. Just released, today's 220 Zacks Rank #5 Strong Sells demand urgent attention. If any are lurking in your portfolio or Watch List, they should be removed immediately. These are sinister companies because many appear to be sound investments. However, from 1988 through 2016, stocks from our Strong Sell list have actually performed 6X worse than the S&P 500
See today's Zacks "Strong Sells" absolutely free >>