Why Guess May Beat Wall Street's Consensus But The Stock Price Could Still Decline

Dec. 4.13 | About: Guess? Inc. (GES)

Guess? Inc. (NYSE:GES) has beaten both the Wall Street consensus and Estimize consensus on both EPS and Revenue, for 3 straight quarters in a row. The question is, can they do it again today and even if they do, could the stock price still go down?

The information below is derived from data submitted to the Estimize platform by a set of Buy Side and Independent analyst contributors.

The current Wall Street consensus expectation is for GES to report 39c EPS and $617.26M Revenue while the current Estimize consensus from 9 Buy Side and Independent contributing analysts is 40c EPS and $623.41M Revenue. The magnitude of the difference between the Wall Street and Estimize consensus numbers often identifies opportunities to take advantage of expectations that may not have been priced into the market. In this case, we're seeing only a small difference between the two.

Over the past 4 months the Wall Street consensus trend for EPS has fallen from 41c to 39c while Wall Street revenue expectations have decreased from $620.01M to $617.26M. The Estimize EPS has gone up and down to finish where it began at 40c. The Estimize Revenue consensus climbed in October and trickled back down a bit prior to the earnings report. It began at $621.14M and currently rests at $623.41M.

Over the previous 8 quarters, GES has beaten the Wall Street consensus for EPS 4 times while beating the Wall Street Revenue consensus 6 times. Over the past 4 quarters for which there is sufficient data GES has beaten the Estimize EPS consensus 3 times and the Estimize Revenue consensus all 4 times.

The distribution of estimates published by analysts on Estimize range from 37c to 45c EPS and $615.00M to $636.44M Revenues. We're seeing a wider than normal distribution of estimates this quarter for GES. The size of the distribution of estimates relative to previous quarters often signals whether or not the market is confident that it has priced in the expected earnings already. A wider distribution signaling the potential for greater volatility post earnings, a smaller vice versa.

The analyst with the highest estimate confidence rating this quarter is 1nvestor, who projects 40c EPS and $617.8M Revenue. In addition to being the highest rated analyst for this earnings report, 1nvestor is also ranked 3rd overall among our 3,321 contributing analysts. Estimize confidence ratings are calculated through algorithms developed by our deep quantitative research which looks at correlations between analyst track records and tendencies as they relate to future accuracy.

The consensus from the Estimize data set suggests that GES may be about to beat the Wall Street expectations again, but not by as wide a margin as we have seen recently. If GES does beat the Street expectation by a small gap but fails to satisfy the market expectations that Estimize signifies, look for the stock price to drift slightly downward over the next 3 days.

Disclosure: No positions