hhgregg Inc. HGG is set to report its fourth quarter fiscal 2016 results on May 19. Last quarter, this appliance and electronics retailer reported a positive surprise of 19.05%. The company has posted negative surprises in two of the past four quarters and positive surprises in the remaining two, translating to an average negative surprise of 16.51%. Let’s see how things are shaping up prior to this announcement. Factors to Consider We are encouraged about hhgregg’s strategic initiatives, which focus on stabilizing the business by reversing the negative sales trends, optimizing marketing spending and improving the cost structure. These initiatives led to positive EBITDA results in the first three quarters of fiscal 2016. The company remains confident that it will generate positive adjusted EBITDA in the fourth quarter as well. These initiatives are also expected to reduce general and administrative expenses by $30 million in fiscal 2016. The company also expects to remain focused on expanding its Fine Lines departments within the appliance category. Further, it plans to increase the sale of larger screen 4K TVs and home theaters, furniture and online sales in fiscal 2016. hhgregg’s cost savings initiatives are also appealing, as it has generated $48.9 million of savings in the first nine months of fiscal 2016. This signals that the company will be able to exceed its target of $50 million of cost savings in fiscal 2016. However, we note that hhgregg has been reporting losses and declining revenues for many quarters, primarily due to weak comparable store sales. The company has been witnessing sluggishness in same-store sales of the consumer electronics segment and computers and tablets category. The company’s home products category and appliance category have also remained weak. Though hhgregg’s strategic initiatives have the potential to revive declining comps, we believe the improvement will take time as the company is still under a lot of pressure and facing volatility. Moreover, hhgregg had earlier expected negative mid-single digit comps for this year. Earnings Whispers? Our proven model does not conclusively show that hhgregg is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below. Zacks ESP: Earnings ESP for hhgregg is 0.00% as the Most Accurate Estimate and Zacks Consensus Estimate stand at a loss of 30 cents. Zacks Rank: hhgregg’s Zacks Rank #3 (Hold) increases the predictive power of ESP. However, we need to have a positive ESP to be confident about a positive surprise. We caution against stocks with Zacks Rank #4 and #5 (Sell rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum. Stocks to Consider Stocks in the retail sector that have both a positive earnings ESP and a favorable Zacks Rank and are therefore worth considering include: Best Buy Co., Inc. BBY, with an Earnings ESP of +2.94% and a Zacks Rank #2 (Buy). The Home Depot, Inc. HD, with an Earnings ESP of +1.50% and a Zacks Rank #2. Lowe's Companies, Inc. LOW, with an Earnings ESP of +2.38% and a Zacks Rank #2. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report HOME DEPOT (HD): Free Stock Analysis Report LOWES COS (LOW): Free Stock Analysis Report BEST BUY (BBY): Free Stock Analysis Report HHGREGG INC (HGG): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research