Three Stocks Positioned for Earnings Beats as Stitch Fix (SFIX) Faces Headwinds

When Stitch Fix (SFIX) reports its fourth-quarter fiscal 2022 results on September 20 after market close, investors should brace for softer performance across both revenue and profitability metrics. However, the broader market presents compelling opportunities for earnings outperformance elsewhere.

The Competition Shows Stronger Fundamentals

Chipotle Mexican Grill (CMG) leads the pack with momentum that suggests genuine upside potential. The company carries a Zacks Rank of 3 (Hold) paired with an Earnings ESP of +1.63%, setting the stage for a potential surprise. Analysts expect third-quarter 2022 earnings per share to reach $9.06, marking a notable 29.1% improvement from the prior-year quarter. Revenue projections tell a similar story, with consensus estimates at $2.2 billion—a 14.4% increase year-over-year. CMG’s track record of delivering earnings surprises in four consecutive quarters (averaging 6.2%) reinforces the bullish case.

Costco (COST) presents another compelling narrative with Rank 3 status and a +0.22% Earnings ESP. For fiscal fourth-quarter 2022, the consensus calls for $4.11 earnings per share, up from $3.90 in the comparable quarter. The retail giant’s top-line growth prospects are equally encouraging, with projected revenues of $71.8 billion representing a 14.6% year-over-year advance. This performance signals resilience against broader economic pressures.

Dave & Buster’s Entertainment (PLAY) rounds out the trio with a Rank 3 rating and a +2.97% Earnings ESP—the highest positive divergence among the three. While third-quarter fiscal 2022 earnings are anticipated to decline 61.9% to 8 cents per share, the revenue story diverges sharply. Top-line figures are expected to climb to $480 million, up 50.6% from the prior year. With a four-quarter earnings surprise average of 9.3%, PLAY demonstrates unpredictable but often favorable surprises.

Why Stitch Fix Lags Behind

In contrast to these three performers, Stitch Fix’s outlook reflects mounting pressure from an unforgiving macro environment. The Zacks model indicates the personalized styling platform will struggle with a $489 million revenue consensus estimate—down 14.3% from the year-ago quarter. Management’s own guidance pegged net revenues between $485-$495 million, translating to a 13-15% decline. Profitability metrics tell an even grimmer tale, with expectations for a 60-cent loss per share, a dramatic swing from the 19-cent earnings posted in the prior fiscal quarter.

The culprits are familiar: supply-chain disruptions, persistent inflation, and shifting consumer preferences have all weighed on performance. Additionally, rising investments in Freestyle—the company’s direct-to-consumer discovery platform—and expansion into new sales channels have pressured the bottom line. Adjusted EBITDA is projected to fall within negative $25 million to negative $30 million, with margin contraction of 5-6%.

What’s telling is that despite SFIX’s Rank 3 status, its Earnings ESP sits at exactly 0.00%, offering no predictive advantage for a beat. This neutral signal, combined with operational headwinds, makes the upcoming release a coin flip at best.

The Silver Lining for Stitch Fix

It’s worth noting that management has been methodically building out Stitch Fix’s digital infrastructure. The Freestyle offering—which lets customers curate and purchase items matched to personal style, preferences, fit and size—represents a genuine competitive differentiation. The platform has successfully expanded the addressable market beyond traditional styling services. Still, profitability recovery remains distant.

For investors tracking SFIX.to and similar opportunities, the earnings calendar reveals a meaningful divergence: while Stitch Fix battles macro headwinds and margin pressure, retailers with simpler, higher-velocity business models are capturing growth momentum. The risk-reward calculus clearly favors the latter.