Will Bebe (BEBE) Miss Earnings? - Analyst Blog

Bebe Stores, Inc. BEBE, a U.S.-based clothing and accessories designer for women, is slated to report its third-quarter fiscal 2014 results on May 8, 2014. In the last quarter, it posted a positive surprise of 53.3%. Let's see how things are shaping up for this announcement.

Factors Influencing the Quarter

The company in its preliminary results announced on Apr 22, revealed that fiscal third quarter results have been greatly impacted by adverse weather conditions during the quarter. The extreme winter weather led to nearly 136 transitory store closures, triggering soft sales. Moreover, the shift in Easter to late April had a significant impact on the company's third quarter sales.

Bebe's comparable store sales (comps) for the quarter ended Apr 5, 2014, descended nearly 5.7%. Also, net sales during the same period plunged 17.2% to roughly $93 million. Therefore, the company has raised its loss expectation range to 29 – 32 cents per share from the earlier forecast of mid-teens range.

Earnings Whispers?

Our proven model does not conclusively show that Bebe 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 to surpass earnings estimates. However, this is not the case here, as you will see below:

Zacks ESP: ESP (Expected Surprise Prediction) for Bebe is 0.00%. This is because the Most Accurate estimate stands at loss per share of 30 cents, which is in line with the Zacks Consensus Estimate.

Zacks Rank #4 (Sell): Bebe's Zacks Rank #4 when combined with 0.00% ESP makes surprise prediction difficult. We caution against stocks with a Zacks Ranks #4 and #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks That Warrant a Look

Here are some other companies you may want to consider as our model shows they have the right combination of elements:

Treehouse Foods Inc. THS has an Earnings ESP of +1.25% and a Zacks Rank #2 (Buy).

CST Brands Inc. CST Earnings ESP stands at +14.29% and it carries a Zacks Rank #3 (Hold).

Foot Locker Inc. FL with an Earnings ESP of +1.91% holds a Zacks Rank #3.