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Aaron's (AAN) Q1 Earnings in Focus: What's in the Cards?

Aaron's, Inc. AAN is scheduled to release first-quarter 2016 results on Apr 29. The big question facing investors is, whether this company – engaged in the sales, and lease ownership and specialty retailing of residential and office furniture, consumer electronics, home appliances and accessories, will be able to continue with its positive earnings surprise streak in the quarter to be reported.

The company’s past performance reveals that it surpassed the Zacks Consensus Estimate in the trailing four quarters by an average of 13.6%, with a positive surprise in three quarters. Let’s see how things are shaping up for this announcement.

 

Zacks Model Shows Unlikely Earnings Beat

Our proven model does not conclusively show that Aaron's is likely to beat earnings 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. Aaron's has an Earnings ESP of 0.00% as the Most Accurate estimate and the Zacks Consensus Estimate are both pegged at 74 cents. Aaron's Zacks Rank #3 (Hold) increases the predictive power of ESP. However, the company’s ESP of 0.00% makes surprise prediction difficult.

Factors Influencing this Quarter

Aaron's remains impressed with its growth trend and performance recorded in 2015. In the fourth quarter, the company continued to achieve growth at its Progressive segment, which has been reporting profitable results on the back of solid revenues for a while now. Additionally, revenues at its Core business improved marginally, thereby leading to broad-based growth.

For 2016, the company intends to remain focused on developing its omnichannel network and further enhancing its e-commerce trends, in an attempt to boost revenues. Following its 2015 results, the company provided a modest outlook for 2016, which includes contribution from the DAMI acquisition.

While these factors bode well, persistent weakness in Aaron’s comparable store sales (comps) remains a concern. For 2016, comps are expected to range from negative 3% to positive 2% in each quarter, while maintaining an improving trend throughout the year. Thus, we would prefer to wait and see what’s in store for Aaron’s in the quarter to be reported.

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:

Cabela's Incorporated CAB, slated to release earnings on Apr 28, 2016, has an Earnings ESP of +10.8% and a Zacks Rank #3.

Urban Outfitters Inc. URBN, scheduled to release earnings on May 18, 2016, has an Earnings ESP of +8.00% and a Zacks Rank #2 (Buy).

The Home Depot, Inc. HD, scheduled to release earnings on May 17, 2016, has an Earnings ESP of +1.50% and a Zacks Rank #3.

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HOME DEPOT (HD): Free Stock Analysis Report
 
AARONS INC (AAN): Free Stock Analysis Report
 
URBAN OUTFITTER (URBN): Free Stock Analysis Report
 
CABELAS INC (CAB): Free Stock Analysis Report
 
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