Zacks Earnings Preview: Deere, Limited, Ross Stores, Aeropostal and Sears Holdings

CHICAGO, May 17, 2011 /PRNewswire/ -- Zacks.com releases the list of companies likely to issue earnings surprises. This week's list includes: Deere (NYSE: DE), Limited (NYSE: LTD), Ross Stores (Nasdaq: ROST), Aeropostal (NYSE: ARO) and Sears Holdings (Nasdaq: SHLD).

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Retailers' Turn

Historically the best indicators of firms likely to report positive surprises are a recent history of positive surprises and rising estimates going into the report. The Zacks Rank is also a good indicator of potential surprises. Similarly a recent history of earnings disappointments, cuts in the average estimate for the quarter in the month before the report is due and a poor Zacks Rank (#4 or #5) are often red flags pointing to a potential disappointing earnings report. In the Earnings Calendar below, $999.00 should be read as N.A.

Potential Positive Surprises

Deere (NYSE: DE) is expected to report EPS of $2.06, up from $1.58 a year ago. Last time out, DE posted a 20.0% positive surprise. Over the last month, analysts have raised their expectations for this quarter by 0.86%. DE is a Zacks #2 Ranked stock.

Limited (NYSE: LTD) is expected to report EPS of $0.39, up from $0.25 a year ago. Last time out, LTD posted a 0.8% positive surprise. Over the last month, analysts have raised their expectations for this quarter by 11.95%. LTD is a Zacks #2 Ranked stock

Ross Stores (Nasdaq: ROST) is expected to report EPS of $1.46, up from $1.16 a year ago. Last time out, ROST posted in line with expectations. Over the last month, analysts have raised their expectations for this quarter by 9.97%. ROST is a Zacks #1 Ranked stock.

Potential Negative Surprises

Aeropostal (NYSE: ARO) is expected to report EPS of $0.20, down from $0.48 a year ago. Last time out, ARO posted a 2.06% disappointment. Over the last month, analysts have cut their expectations for this quarter by 45.5%. ARO is a Zacks #4 Ranked stock.

Sears Holdings (Nasdaq: SHLD) is expected to report a loss of $1.12, down from EPS of $0.16 a year ago. Last time out, DRYS posted a positive surprise of 4.86.  Over the last month, analysts have cut their expectations for this quarter by 3450% (going from an expected profit to an expected loss). SHLD is a Zacks #4 Ranked stock.

Dirk Van Dijk, CFA, is the Chief Equity Strategist for Zacks.com.

About the Zacks Rank

Since 1988, the Zacks Rank has proven that "Earnings estimate revisions are the most powerful force impacting stock prices." Since inception in 1988, #1 Rank Stocks have generated an average annual return of +28%. During the 2000-2002 bear market, Zacks #1 Rank stocks gained +43.8%, while the S&P 500 tumbled -37.6%. Also note that the Zacks Rank system has just as many Strong Sell recommendations (Rank #5) as Strong Buy recommendations (Rank #1). Since 1988, Zacks Rank #5 stocks have significantly underperformed the S&P 500 (+2% versus +9%). Thus, the Zacks Rank system allows investors to truly manage portfolio trading effectively.

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