5 Stocks To Watch That Report Earnings Tomorrow - Thursday, March 2

Costco (COST): Costo gives a preliminary look at quarterly results which often diminishes the mystery of a normal earnings report. In the three months that make up the fiscal second quarter, Costco posted positive comparable sales growth across all market segments. Comparable growth in January and December averaged 6% with notable increases coming from U.S. and Canadian operations. Costco’s cult like following induced by its wholesale business model continues to effectively stave off threats from Amazon and other online retailers. As is always the case, key membership figures will draw investors attention and dictate the direction of the post earnings drift.

 

American Outdoor Brands (AOBC): The company formerly known as Smith & Wesson heads into tomorrow’s report firing blanks. Shares tumbled nearly 20% in the past 3 months owing to the new administration’s apathetic stance towards gun control. Traditionally firearm companies perform well under a Democrat because liberal policies aim at ramping up gun control whereas Republicans cling to the second amendment. Nonetheless, AOBC still expects to record double digit top line growth on several new product launches and robust accessory segment sales. But more importantly, the company’s guidance number will draw the attention . Considering background checks declined 9 percent between November and January, AOBC’s near term future appears bleak.

 

Abercrombie & Fitch (ANF): Teen retailers sustain a steady slide down on account of disappointing earnings results and difficulty recapturing market share from fast fashion brands like H&M. Abercrombie remains a prime example of the ongoing trend away from teen retail by recording 8+ consecutive quarters of negative top line growth. The problem in front of Abercrombie is twofold; changing consumer preferences along with a steep decline in overall mall based traffic devastated the business model it operated under. Some of that decline comes from an influx of online retailers which Abercrombie started to focus on to remain competition. Nonetheless, analysts at Estimize don’t expect to see a turnaround this quarter, calling for a 20 percent in earnings and a 5 percent in sales.

 

Kroger (KR): The supermarket chain has a history of beating on the bottom line and delivering in-line results on the top. Earnings growth has significantly decelerated throughout this streak with expectations of declining by 3% in the upcoming quarters. Revenue forecasts, on the other hand, continue to trend sideways around mid single digits, consistent with the previous 4 quarters. The company is well positioned to sustain this sales growth with its expanding store base and dominant market position. Moreover Kroger has gained ground in its organic offerings, attracting additional customers who had otherwise frequented Whole Foods. Shares are down 21% from a year earlier and clearly haven’t reacted well to the company’s near term upside.  

 

Barnes & Noble (BKS): Barnes & Noble is still feeling the effects from Amazon competition over the past decade. BKS was the first of Amazon’s many victims, making physical bookstores nearly obsolete. Today’s consumers liken a bookstore to a showroom which they only look and last purchase online. Needless to say Barnes & Noble’s performance has suffered in recent years. Some of these losses however have been offset by ecommerce and NOOK sales. Efforts to reduce expenses could provide some support to the bottom line. Nonetheless, top line growth dropped for 8 consecutive quarters and will like maintain that trend moving forward.