Pier 1 Earnings: An Early Look

Earnings season has begun, and on Thursday, Pier 1 Imports (NYSE: PIR  ) will release its latest quarterly results. The key to making smart investment decisions on stocks reporting earnings is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

Pier 1 has recovered from the brink of collapse during the bear market of 2008 and early 2009, and now, its stock is approaching all-time highs. Will the bounce in the housing market provide the catalyst Pier 1 needs to break to record levels? Let's take an early look at what's been happening with Pier 1 over the past quarter and what we're likely to see in its quarterly report.

Stats on Pier 1

Analyst EPS Estimate

$0.60

Change From Year-Ago EPS

25%

Revenue Estimate

$551.4 million

Change From Year-Ago Revenue

16%

Earnings Beats in Past 4 Quarters

1

Source: Yahoo! Finance.

Will Pier 1 give investors what they want this quarter?
Analysts haven't budged much on their views of Pier 1's earnings prospects over the past few months. They've held steady on their calls for the most-recent holiday quarter, and they shaved a penny per share from their full-year fiscal 2014 consensus. But the stock has done quite well, rising more than 13% since early January.

The reason for Pier 1's strong performance lately is pretty simple: Demand for new homes has picked up, and when buyers move into a new home, they tend to buy home furnishings to go with it. Higher-end retailer Williams-Sonoma (NYSE: WSM  ) already announced solid results for its holiday quarter, especially citing growth in its home-furnishings segments as a big contributor to its overall results.

But last month, Pier 1 gave mixed guidance on its holiday quarter. Although it saw same-store sales gain almost 8% for the quarter, its earnings-per-share projections were somewhat disappointing, sending shares temporarily lower. More recently, mixed housing data has left the stock trading more turbulently.

The real key for the entire home-furnishings business is how they respond to the threat of online competition. Bed Bath & Beyond (NASDAQ: BBBY  ) has been relatively slow to ramp up its Internet-based business, and as a result, it was recently named in a study on showrooming as the most vulnerable to online competitors. For its part, Pier 1 has reinvigorated its Internet-based sales recently, creating a barrier against online retailers who could take away its market share.

In Pier 1's quarterly report, watch closely for signs of where Pier 1's sales are coming from. If the company can see growth in its Internet business, it will demonstrate further evidence that the retailer has carved out a niche it can defend in the future.

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