The Zacks Analyst Blog Highlights:FTI Consulting, Aeropostale, Five Below, Kroger and Costco Wholesale

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Dec 03, 2013, 09:30 ET

CHICAGO, Dec. 3, 2013 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the FTI Consulting, Inc. (NYSE:FCN-Free Report), Aeropostale, Inc. (NYSE:ARO-Free Report), Five Below, Inc. (Nasdaq:FIVE-Free Report), The Kroger Co. (NYSE:KR-Free Report) and Costco Wholesale Corporation (Nasdaq:COST-Free Report).

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Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Monday's Analyst Blog:

FTI Consulting Upgraded to Outperform

On Dec 2, we upgraded our long-term recommendation for management services provider FTI Consulting, Inc. (NYSE:FCN-Free Report) from Neutral to Outperform. The company's diligent execution of operational plans, strategic decision to extend its global footprint and continuous organic growth across the industry verticals augur well for its growth prospects. However, continuous budgetary pressures along with a weak macroeconomic environment could weigh on the margins moving forward.

Why the Upgrade?

FTI Consulting is well positioned to benefit from an increased regulatory scrutiny and a proliferation of corporate litigation, which would leave the management teams of public companies with little leeway to deal with complex issues. External pressure on the management teams is further compounded by active investigations by government auditors and authorities including the Securities Exchange Commission (SEC), the Department of Justice (DOJ) and the state attorneys.

Additionally, structural changes have become a necessity in the rapidly evolving global markets as management teams look to fend off rivals, protect intellectual property rights and transform businesses via M&A, divestiture and other restructuring activities. We believe that the demand for the company's specialized consulting services should experience a robust growth over the long term.

Internationally, FTI Consulting's unique capabilities of bringing together damage assessment, accounting, economics, statistics, finance, industry and global footprint make it an excellent partner for clients dealing with international arbitration issues, and generating continued revenue growth in the existing international operations, coupled with contributions from the acquisitions made over the past few months in Europe, Asia and Latin America. FTI Consulting's international expansion remains strong and will likely continue in the future as well.

Earnings estimates for full year 2013 for FTI Consulting have moved up in the last 30 days as 4 out of 5 estimates have been revised upward. The current Zacks Consensus Estimate for the year is pegged at $2.30, up 6% from $2.17 in the last 30-day period. This represents a healthy upside from management guidance of an adjusted EPS for 2013 in the range of $2.10 to $2.20. The stock is also trading near its 52-week high with a forward PE of 19.6x.

Will Aeropostale (ARO) Beat or Disappoint?

Aeropostale, Inc. (NYSE:ARO-Free Report) is slated to report third-quarter fiscal 2013 results on Dec 4, 2013. In the previous quarter, it posted a negative surprise of 41.7%. Let's see how things are shaping up for this announcement.

Factors in the Past Quarter

Aeropostale's dismal second-quarter fiscal 2013 results were mainly due to weak traffic and higher promotional expenses. Additionally, macroeconomic headwinds and increased inventory levels were a drag on the company's top-line growth.

Earnings Whispers?

Our proven model does not conclusively show that Aeropostale is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Negative Zacks ESP: ESP for Aeropostale is -8.00%. This is because the Most Accurate Estimate stands at a loss of 27 cents and the Zacks Consensus Estimate stands at a loss of 25 cents.

Zacks Rank #5 (Strong Sell): Aeropostale's Zacks Rank #5 (Strong Sell) and a negative ESP make surprise prediction difficult. We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat:

Five Below, Inc. (Nasdaq:FIVE-Free Report) with Earnings ESP of +25.0% and Zacks Rank #2 (Buy)

The Kroger Co. (NYSE:KR-Free Report) with Earnings ESP of +1.89% and Zacks Rank #2 (Buy)

Costco Wholesale Corporation (Nasdaq:COST-Free Report) with Earnings ESP of +0.97% and Zacks Rank #3 (Hold).

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

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