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Factors Setting the Tone for Hibbett (HIBB) in Q3 Earnings

Zacks Equity Research

Hibbett Sports, Inc. HIBB is slated to release third-quarter fiscal 2020 results on Nov 22, before the market opens.

Notably, the company's earnings were in line with the Zacks Consensus Estimate in the preceding quarter. However, the bottom line outpaced estimates by 12.1%, on average, over the trailing four quarters.

The Zacks Consensus Estimate for fiscal third-quarter earnings is pegged at 12 cents, which suggests a decline of 14.3% from the year-ago period. The consensus estimate has been unchanged in the past 30 days. Moreover, the consensus mark for sales is pegged at $256.4 million, indicating growth of 18.2% from the year-ago reported figure.

Hibbett Sports, Inc. Price and EPS Surprise

 

Hibbett Sports, Inc. Price and EPS Surprise

Hibbett Sports, Inc. price-eps-surprise | Hibbett Sports, Inc. Quote

Key Factors to Note

Hibbett’s fiscal third-quarter sales are expected to reflect gains from solid omni-channel initiatives, including store rationalization, e-commerce and loyalty program. Notably, the company’s e-commerce business has been benefiting from enhancements in mobile app, and the “Buy Online, Pick Up in Store” and “Reserve online, pickup in store” capabilities. New sign-ups and loyalty enrollments as well as its efforts to improve the email program have also been driving growth.

In addition, Hibbett’s impressive product offerings coupled with the robust City Gear business on strong assortment of the latest and fashion-forward inventory are expected to have contributed to its fiscal third-quarter performance. Also, its continued focus on sneakers, active apparel, accessories and footwear categories has been driving growth. These factors are likely to get reflected in Hibbett’s comparable-store sales (comps) performance for the quarter to be reported. The consensus estimate for fiscal third-quarter comps suggests growth of 3.5% from the year-ago reported figure.
 
However, Hibbett has been witnessing higher SG&A expenses for a while now. Additionally, higher investments for the expansion of e-commerce capabilities have been affecting margin growth. Inventory liquidation at stores and limited markdown activity has also been affecting the company. In addition, management’s accelerated store closure plan to increase productivity has been adding to margin pressure, thanks to lack of sales from the closed stores. All these factors might have hurt the company’s margins and overall profits in third-quarter fiscal 2020.

Zacks Model

Our proven model does not conclusively predict an earnings beat for Hibbett this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Although Hibbett carries a Zacks Rank #3, its Earnings ESP of 0.00% makes surprise prediction difficult.

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Ross Stores, Inc ROST has an Earnings ESP of +4.03% and a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Walmart Inc WMT currently has an Earnings ESP of +2.45% and a Zacks Rank #2.

Lowe's Companies, Inc LOW presently has an Earnings ESP of +1.62% and a Zacks Rank #2.

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