Zale Earnings Preview

Investors hope Zale (NYSE: ZLC  ) will top analyst estimates once again after beating predictions by $0.10 in the previous quarter. The company will unveil its latest earnings on Monday, Nov. 21. Zale is a specialty retailer of fine jewelry. It operates specialty retail jewelry stores and kiosks located mainly in shopping malls throughout the United States, Canada, and Puerto Rico.

What analysts say:

• Buy, sell, or hold?: Analysts think investors should stand pat on Zale with three of four analysts rating it hold. Analysts like Zale better than competitor Blue Nile overall. One out of 11 analysts rate Blue Nile a buy compared to one of four for Zale. Analysts still rate the stock a hold, but they are a bit more wary about it compared to three months ago.
• Revenue Forecasts: On average, analysts predict $338.6 million in revenue this quarter. That would represent a rise of 3.5% from the year-ago quarter.
• Wall Street Earnings Expectations: The average analyst estimate is a loss of $1.42 per share. Estimates range from a loss of $1.54 to a loss of $1.34.

What our community says:
Most CAPS All-Stars are skeptical of Zale's prospects, with 68.8% giving it an "underperform" rating. The community is of two minds on the stock with 46% Fools awarding it an "outperform" rating and 54% an "underperform" rating. Fools are bearish on Zale and haven't been shy with their opinions lately, logging 203 posts in the past 30 days. Zale's bearish CAPS rating of one out of five stars falls short of the Fool community sentiment.

Management:
Revenue has now gone up for three straight quarters.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and net margins over the past four quarters.

Quarter	Q4	Q3	Q2	Q1
Gross Margin	51.3%	50.1%	50.3%	50.5%
Operating Margin	(6.4%)	(1.3%)	7.0%	(12.8%)
Net Margin	(8.7%)	(2.2%)	4.3%	(29.9%)

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