Is Macy's (M) Set To Beat Earnings Estimates Next Week?

Even though markets have begun to stabilize in the wake of the recent sell-off, investors need to remain just as vigilant in their pursuit of stocks poised to top earnings estimates. For instance, Walmart (NYSE:WMT) was cruising along until it fell short of Q4 earnings estimates before markets opened on Tuesday. Its stock price has sunk more than 12% since then.

With that said, investor have likely turned their attentions to another retail sector bellwether, from a different key industy, that is set to report its fourth-quarter and fiscal full year earnings results next week.

Macy's (NYSE:M) is expected to see its earnings surge 31.68% to hit $2.66 per share in the vitally important holiday quarter, based on our current Zacks Consensus Estimates. The upscale retail giant is also projected to post revenues of $8.71 billion, which would mark a 2.25% year-over-year jump.

Investors will be happy to note that Macy’s is projected to expand its bottom-line by over 30%. But if we want to know whether Macy’s is on track to actually surpass these estimates, we have to take a closer look.

Luckily, Zacks Premium customers can utilize the Earnings ESP Screener in order to search for stocks that are expected to beat. Zacks Earnings ESP (Expected Surprise Prediction) looks to find earnings surprises by focusing on the most recent analyst estimates.

This is done because, generally speaking, when an analyst posts an estimate right before an earnings release, it means that they have fresh information which could potentially be more accurate than what analysts thought about a company two or three months ago.

A positive Earnings ESP paired with a Zacks Rank #3 (Hold) or better ranking helps us feel confident about the potential for an earnings beat. In fact, our 10-year backtest has revealed that this methodology has accurately produced a positive surprise 70% of the time.

Macy's is currently a Zacks Rank #2 (Buy) and has an Earnings ESP of 0.92%. This means earnings estimates have been higher directly ahead of Macy's Q4 results, so investors should consider this stock as one with strong prospects to beat earnings next week.

Investors should also note that the department store power has topped earnings estimates in the trailing two quarters by 21.05% and 6.67%, respectively.

Macy's is set to report its fourth-quarter and full fiscal year earnings before the opening bell on Tuesday, Feb. 27.

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