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Factors Likely to Influence Hibbett’s (HIBB) Earnings in Q1

Zacks

Hibbett Sports, Inc. HIBB is slated to release first-quarter fiscal 2021 results on May 26, before market open. The company delivered a negative earnings surprise of 17.7% in the last reported quarter. However, its bottom line outpaced estimates by 40.2%, on average, over the trailing four quarters.

The Zacks Consensus Estimate for fiscal first-quarter earnings is pegged at 43 cents, which suggests a decline of 73.3% from the year-ago period’s reported figure. The consensus estimate has moved down by 45.6% in the past 30 days.

Key Factors to Note

On its last earnings call, Hibbett highlighted that its stores are open for limited hours and with lesser employees amid the COVID-19 crisis. Also, its digital business continues to operate with facilities such as buy online and pick up in store (BOPIS) and reserve online and pick up in store (ROPIS) services for the convenience of customers. Further, the company notified that it doesn’t foresee any supply-chain disruptions for the fiscal first quarter.

Hibbett Sports, Inc. Price and EPS Surprise

Hibbett Sports, Inc. Price and EPS Surprise

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

However, the company witnessed sluggishness in demand beginning mid-March due to restrictions on movements and with the stay-at-home orders enforced. Driven by the unprecedented impacts of COVID-19 on its operations, management did not issue any forward guidance.

Prior to the COVID-19 impacts, the company had been witnessing a robust top-line trend driven by solid comparable sales performance, sturdy digital and in-store businesses as well as online sales contributions from the City Gear business. Moreover, its focus and investments in the strategy of leading with sneakers have been aiding comps, recording positive footwear comps in the past 10 quarters.

Nonetheless, soft margins and higher expenses as well as the inclusion of costs related to the City Gear acquisition have been hurting the company’s performance of late. Gross margin has been witnessing declines owing to increased store closures as part of its store-rationalization efforts, while higher store operating, selling and administrative (SG&A) expenses have been hurting operating income. Addition of expenses related to the City Gear acquisition has been increasing SG&A expenses, on a GAAP basis. Apart from the coronvirus-related impacts, the persistence of these costs may be detrimental to the company’s earnings in first-quarter fiscal 2021.

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 -22.35% makes surprise prediction difficult.

Stocks Poised to Beat Earnings Estimates

Here are some companies that you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this time around.

Big Lots, Inc. BIG presently has an Earnings ESP of +19.01% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Kroger Co. KR has an Earnings ESP of +1.70% and a Zacks Rank #2 at present.

Dollar General Corporation DG currently has an Earnings ESP of +3.19% and a Zacks Rank #3.

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