Will Zumiez (ZUMZ) Beat Earnings Again This Quarter?

We expect the Washington-based retailer of sports-related teen apparel Zumiez Inc. ZUMZ to beat expectations when it reports second-quarter 2014 results on Sep 4.

Why a Likely Positive Surprise?

Our proven model shows that Zumiez may beat earnings because it has the right combination of two key components.

Positive Zacks ESP: Zumiez currently hahs an Earnings ESP of +4.55%. This is because the Most Accurate estimate stands at 23 cents per share, while the Zacks Consensus Estimate is pegged at 22 cents.

Zacks Rank #2 (Buy): Note that stocks with a Zacks Rank #1, 2 and 3 have a higher chance of beating earnings. The Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.

The combination of Zumiez's Zacks Rank #2 and Earnings ESP of +4.55% makes us confident of a positive earnings beat.

What is Driving Better-than-Expected Earnings?

Zumiez Inc. is a mall-based specialty retailer of action-sports related apparel, footwear, equipment and accessories. The company's strategy of offering action sports merchandise focused on young adults, both men and women aged 12 to 24 years, has enabled it to carve a distinct niche for itself.

Zumiez posted better-than-expected first-quarter fiscal 2014 earnings driven by strong top-line performance due to the successful execution of its long-term growth strategies and the strength of its distinguished and varied assortments. With a positive surprise of 100% in the first quarter, the company has now surpassed the Zacks Consensus Estimate 24 times in the past 26 quarters. We expect the company to keep up this trend of posting positive earnings surprises in the years ahead, based on its focus on boosting productivity at existing stores, developing a leading omni-channel platform and enhancing its presence both domestically and overseas.

Our view is backed by the company's positive comps performance and encouraging sales and earnings guidance for the second quarter of fiscal 2014. Management anticipates second-quarter revenues in the range of $167–$171 million, while comps are expected to be in the range of negative low single-digits to flat. Further, the company expects earnings per share in the range of 12–16 cents for the second quarter.

Zumiez has topped the Zacks Consensus Estimate in the trailing four quarters with an average positive surprise of 41.4%. In the last concluded quarter, the company's earnings were double the Zacks Consensus Estimate.

Other Stocks to Consider

Zumiez is not the only firm looking up this earnings season. The following companies are also likely to beat earnings in the to-be-reported quarter:

Limoneira Company LMNR has an Earnings ESP of +12.50% and a Zacks Rank #2.

Calavo Growers Inc. CVGW has an Earnings ESP of +2.17% and a Zacks Rank #3 (Hold).

Quanex Building Products Corporation NX with an Earnings ESP of +4.76% and a Zacks Rank #3.