Will Sally Beauty (SBH) Surprise this Earnings Season? - Analyst Blog

Sally Beauty Holdings Inc. (SBH) is slated to report its fourth-quarter fiscal 2014 results on Nov 13. In the last quarter, the company's earnings came in line with the Zacks Consensus Estimate of 43 cents per share. Let's see how things are shaping up for this announcement.

Factors Influencing this Quarter

Sally Beauty's previous quarter was favorably impacted by an improvement in the Sally U.S. business and a sturdy performance by its Beauty Systems Group segment, mainly on the back of new store openings and comparable store sales growth. Management is confident about its fundamentals as it believes that the company has inherent strength. However, it believes that there is still scope for improvement and intends to continue undertaking initiatives like product innovations, enhancing marketing skills, expanding operations globally and maintaining its primary focus on customers. These measures are likely to boost its performance.

Earnings Whispers?

Our proven model does not conclusively show that Sally Beauty is likely to beat earnings 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. This is not the case here, as you will see below:

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is currently pegged at 0.00%. This is because the Most Accurate estimate and the Zacks Consensus Estimate both stand at 40 cents.

Zacks Rank: Sally Beauty carries a Zacks Rank #3 (Hold). Though Zacks Rank #1, 2 or 3 increases the predictive power of ESP, the company's ESP of 0.00% makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #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 companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Best Buy Co., Inc. (BBY) has an Earnings ESP of +4.17% and a Zacks Rank #2 (Buy).

The Kroger Co. (KR) has an Earnings ESP of +3.28% and a Zacks Rank #2.

Dollar Tree, Inc. (DLTR) has an Earnings ESP of +1.56% and a Zacks Rank #2.

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