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Factors Likely to Influence Michaels' (MIK) Q3 Earnings

The Michaels Companies, Inc. MIK is slated to report third-quarter fiscal 2020 results on Dec 3, before the opening bell.

The Zacks Consensus Estimate for the company’s fiscal third-quarter earnings is pegged at 59 cents, which suggests a sharp improvement of 47.5% from 40 cents reported in the year-ago quarter. Notably, the consensus mark has been unchanged in the past 30 days. The consensus estimate for fiscal third-quarter sales is pegged at $1,419 million, indicating 16.1% growth from the prior-year quarter’s reported number.

The company delivered a positive earnings surprise of 700% in the last reported quarter. Moreover, the bottom line beat estimates by 38.1%, on average, in the trailing four quarters.

Factors to Note

Michaels’ focus on enhancing marketing activities, improving omni-channel and e-commerce capabilities, and providing contactless in-store shopping experience is likely to have favorably impacted fiscal third-quarter performance. We note that the company has been gaining from the rising demand for its products online, which might have boosted e-commerce sales. Its quarterly performance is likely to have benefited from capabilities like buy online, pick up in-store; same-day delivery; and expanded ship from store.

On the store front, the company has been reinventing its store formats with a new in-store layout, inspiration hubs and an innovative checkout design under its Maker strategy. Alongside this, its revamped rewards loyalty program is expected to have had a favorable impact on the fiscal third-quarter performance.

Clearly, the aforementioned factors raise optimism about the results. However, margins remain an area to watch. Impacts of costs associated with digital fulfillment and COVID-related expenses cannot be ruled out. We note that costs related to additional employee payments and benefits, and investments undertaken to preserve the safety and health of customers and team members amid the coronavirus crisis are likely to get reflected in margins.

The Michaels Companies, Inc. Price and EPS Surprise

 

Zacks Model

Our proven model does not conclusively predict an earnings beat for Michaels this time around. 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.

Michaels has a Zacks Rank #2 but an Earnings ESP of 0.00%.

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.

Signet Jewelers Limited SIG currently has an Earnings ESP of +13.95% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Kroger Co. KR presently has an Earnings ESP of +0.38% and a Zacks Rank #2.

Casey’s General Stores CASY currently has an Earnings ESP of +1.49% and a Zacks Rank #3.

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Signet Jewelers Limited (SIG): Free Stock Analysis Report
 
The Kroger Co. (KR): Free Stock Analysis Report
 
Caseys General Stores, Inc. (CASY): Free Stock Analysis Report
 
The Michaels Companies, Inc. (MIK): Free Stock Analysis Report
 
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