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L Brands, Inc . LB is slated to release fourth-quarter fiscal 2018 results on Feb 27. This specialty retailer of women's intimate and other apparel, beauty, and personal care products delivered average positive earnings surprise of 7.3% in the trailing four quarters. The Zacks Consensus Estimate for earnings for the quarter under review stands at $2.06, reflecting year-over-year decline of 2.4%. We also note that the Zacks Consensus Estimate has been stable in the past 30 days.

We also note that the company had earlier updated its bottom-line view wherein it expected adjusted earnings to be at the higher end of its prior view of $1.90-$2.10. This outlook didn't include an estimated pretax charge of $80 million related to the sale of La Senza. 

L Brands, Inc. Price and EPS Surprise

L Brands, Inc. Price and EPS Surprise | L Brands, Inc. Quote

Factors Likely to Influence L Brands Performance

L Brands' sustained focus on cost containment, inventory management and merchandising initiatives bodes well. Also, with the sale of La Senza brand, the company can now concentrate on core brands like Victoria's Secret Lingerie, PINK and Victoria's Secret Beauty. Further, the company's focus on international markets is likely to provide growth opportunities and generate incremental sales in the near future.

Moving on, L Brands came out with comparable store sales (comps) and sales results for the month of January, for the 13-week period ended Feb 2, 2019. The company's comps rose 3%, whereas net sales inched up 0.6% to $4.9 billion. This rise can be attributable to solid performance in the Bath & Body Works category that continues to drive the company's top line. 

However, the company has been witnessing weak margins for quite some time now. Management had earlier projected gross margin to decline year over year during the fourth quarter, owing to decrease in merchandise margin rate. Also, SG&A costs are anticipated to escalate in the fourth quarter on reclassification of Angel card income and the incremental wage investments. For fiscal 2018, gross margin rate is expected to decline year over year, while SG&A costs are likely to increase year over year for the aforementioned reasons. 

What the Zacks Model Unveils

Our proven model doesn't show that L Brands is likely to beat estimates this quarter as the stock doesn't have the right combination of two key ingredients - a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Although L Brands has a Zacks Rank #3 (Hold), its Earnings ESP of -3.35% makes surprise prediction difficult. You can see the complete list of today's Zacks #1 Rank stocks here .

Stocks Poised to Beat Earnings Estimates

Here are a few companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Zumiez ZUMZ has an Earnings ESP of +0.45% and a Zacks Rank #1.

Abercrombie & Fitch ANF has an Earnings ESP of +0.94% and a Zacks Rank #2.

Foot Locker FL has an Earnings ESP of +2.25% and a Zacks Rank #2.

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Abercrombie & Fitch Company (ANF): Free Stock Analysis Report

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L Brands, Inc. (LB): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of NASDAQ, Inc.

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