Will Select Comfort (SCSS) Disappoint This Earnings Season? - Analyst Blog

Select Comfort Corporation SCSS, the home furnishing and fixtures retailer, is set to report its first-quarter 2014 results on Apr 17, 2014. Last quarter, it posted a negative surprise of 20.0%. Let us see how things are shaping up for this announcement.

Factors in the Past Quarter

Aggressive discounting trends, a competitive retail landscape coupled with unfavorable weather and reduced mall traffic resulted in the dismal quarterly performance.  Rising costs was another contributing factor with operating expenses in 2013 having increased 7.2% year over year.

Earnings Whispers

Our proven model does not conclusively project Select Comfort as likely to beat earnings this quarter. That 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. This is not the case here as you will see below.

Zacks ESP: ESP for Select Comfort is 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate stand at 31 cents.

Zacks Rank #3 (Hold): Select Comfort's Zacks Rank #3 (Hold) lowers the predictive power of ESP because this Zacks Rank when combined with a 0.00% ESP makes surprise prediction difficult. We caution against stocks with a Zacks Rank #4 and 5 (Sell-rated stocks) going into an earnings announcement, especially when the company is witnessing negative estimate revisions momentum.

Other Stocks to Consider

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

• Alaska Air Group, Inc. ALK with an Earnings ESP of 7.00% and a Zacks Rank #1
• Southern First Bancshares, Inc. SFST with an Earnings ESP of 7.41% and a Zacks Rank #1
• TD Ameritrade Holding Corp. AMTD with an Earnings ESP of 6.06% and a Zacks Rank #2