Aeropostale (ARO) to Report Q4 Earnings: What's in Store?

Aéropostale, Inc. ARO, a mall-based specialty retailer of casual and active apparel, is slated to report fourth-quarter fiscal 2015 results on Mar 17. The big question facing investors now is whether the company will be able to deliver a positive earnings surprise in the quarter to be reported. In the preceding fiscal quarter, Aéropostale had outperformed the Zacks Consensus Estimate by 11.4%. 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 Aéropostale is likely to beat estimates this fiscal 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. Aéropostale has an ESP of 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate stand at a loss of 14 cents. The company carries a Zacks Rank #3 (Hold), which increases the predictive power of ESP. However, the company's ESP of 0.00% makes our surprise prediction difficult.

Factors Influencing this Quarter

Aéropostale's products have been witnessing soft demand due to a challenging teen retail environment, and this may have an adverse effect in the quarter to be reported. Management had earlier reiterated fourth-quarter fiscal 2015 operating loss between $0.0 million and $10 million and net loss in the band of 4–17 cents a share.

However, to battle the odds, the company resorted to both national and international expansion in a big way. Aéropostale entered into licensing agreements to tap the markets of India, Ireland, Thailand and Egypt. Last year, it also inked a domestic licensing agreement with Himatsingka America, a home textile major with a vast global presence, to expand its reach to new customers. Aéropostale has also undertaken cost-cutting measures which are expected to save approximately $35–$40 million before taxes in fiscal 2016.

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:

G-III Apparel Group, Ltd. GIII with an Earnings ESP of +7.14% and a Zacks Rank #3.

NIKE, Inc. NKE with an Earnings ESP of +2.04% and a Zacks Rank #3.

GameStop Corp. GME with an Earnings ESP of +0.44% and a Zacks Rank #3.

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