Macy’s, Inc. (M - Analyst Report), one of the leading department store retailers, is slated to report third-quarter fiscal 2014 results on Nov 12. In the last quarter, it had posted a negative surprise of 7%. Let’s see how things are shaping up for this announcement.

Factors Influencing this Quarter

We remain cautious about Macy’s comparable-store sales performance in the quarter under discussion, following trimmed comparable-store sales forecast for the fiscal year and tough year-over-year comparison. Management had earlier hinted that total sales growth in the back half of the year is expected to shrivel 30 basis points compared with the comparable-store sales growth.

Earnings Whispers?

Our proven model does not conclusively show that Macy’s is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below:

Zacks ESP: Earnings ESP for Macy’s is -4.00%. This is because the Most Accurate estimate stands at 48 cents, while the Zacks Consensus Estimate is pegged at 50 cents.

Zacks Rank: Macy’s Zacks Rank #3 (Hold) increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.

We caution against stocks with a Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks that Warrant a Look

Here are some companies you may want to consider as our model shows that these have the right combination of elements:

Best Buy Co., Inc. (BBY - Analyst Report) has an Earnings ESP of +4.17% and a Zacks Rank #1 (Strong Buy).

The Kroger Co. (KR - Analyst Report) has an Earnings ESP of +3.28% and a Zacks Rank #2 (Buy).

Dollar Tree, Inc. (DLTR - Analyst Report) has an Earnings ESP of +1.56% and a Zacks Rank #2.

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