Can Hibbett’s (HIBB) Strategic Endeavors Aid Q4 Earnings?

Hibbett Sports, Inc. HIBB is slated to release fourth-quarter fiscal 2018 results on Mar 16. The company’s earnings outpaced the Zacks Consensus Estimate in three of the trailing four quarters, with an average beat of 25.6%.

The Zacks Consensus Estimate for the fourth quarter is pegged at 41 cents, reflecting a year-over-year decline of 24.1%. However, the estimate witnessed an uptrend in the last 30 days. Further, management envisions earnings per share in the band of 47-51 cents, including an anticipated gain of 7 cents from the divestiture of the company’s Team Division.

Hibbett Sports, Inc. Price and Consensus

Hibbett Sports, Inc. Price and Consensus | Hibbett Sports, Inc. Quote

Let’s see how things are shaping up prior to this announcement.

Factors Likely to Influence 4Q18

Recently, Hibbett reported fourth-quarter net sales of $ 266.7 million that improved 8% year over year, including $ 13.5 million for the 53rd week. Additionally, comparable-store sales (comps) rose 1.6% while e-commerce sales represented 7.6% of the total sales in the fourth quarter. Results in the quarter gained from strength seen in branded apparel and footwear categories as well as persistent momentum in the e-commerce business. Also, fourth-quarter preliminary results outpaced the company’s expectations.

Moreover, Hibbett is encouraged by the progress it is making on its internal initiatives, including the launch of new e-commerce site and the re-launch of loyalty program. Also, the initial results from the website launch have exceeded expectations while the new loyalty program has been well received by customers. Additionally, its ongoing marketing initiatives have been boosting sales by improving traffic and increasing loyalty members, besides enhancing site navigation strength and product assortments. These strategies are likely to drive fourth-quarter results.

While these factors raise optimism on the stock, Hibbett witnessed a promotional holiday season that affected fourth-quarter gross margin. Furthermore, the company has been witnessing strained margins for a while now due to increased promotions and markdowns in order to maintain lower inventory levels along with higher freight and SG&A expenses.

Nonetheless, Hibbett ended fiscal 2018 with a better inventory position. Also, the company remains well positioned to gain from growth of omni-channel capabilities, improved Rewards members, small-market strategy and inventory management.
What the Zacks Model Unveils

Our proven model shows that Hibbett 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 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Hibbett has an Earnings ESP of +8.62% and a Zacks Rank #3, making us reasonably confident of an earnings beat.

Other Stocks Poised to Beat Earnings Estimates

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

Dollar General Corporation DG has an Earnings ESP of +1.69% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Lululemon Athletica Inc. LULU has an Earnings ESP of +1.30% and a Zacks Rank of 3.

Signet Jewelers Limited SIG has an Earnings ESP of +0.47% and a Zacks Rank #3.

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lululemon athletica inc. (LULU): Free Stock Analysis Report
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