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The J. M. Smucker Co. (SJM - Analyst Report) is set to report third-quarter fiscal 2014 results before the opening bell on Feb 14. Last quarter, this food products manufacturer posted a negative surprise of 4.40%. Let’s see how things are shaping up prior to the announcement.

Factors to Consider

The recent weakness in K-cup sales and price declines mainly in coffee and peanut butter are concerns for Smucker.

Smucker’s sales have been impacted by a decline in net price realization over the last one year, mainly in coffee and peanut butter. Though the company has benefited from the decline in commodity costs, primarily owing to lower green coffee costs, the lower pricing has more than offset the benefit.

Last quarter, the performance of the K-Cup business was below the company’s expectations, as sales of one of its K-cup brands, Millstone K-Cup, declined significantly in the quarter, probably due to increased competitive activity. The company also lowered its K-Cup sales growth expectation to a mid-single digit percent range for fiscal 2014 compared to its prior expectation of 15% growth.

Earnings Whispers?

Our proven model does not conclusively show that Smucker 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.

Zacks ESP: The Expected Surprise Prediction or ESP for Smucker is 0.00% as both the Zacks Consensus Estimate and Most Accurate Estimate stand at $1.67 per share.

Zacks Rank #4 (Sell): Smucker’s Zacks Rank #4 when combined with a 0.00% ESP makes 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 momentum.

Other Stocks to Consider

Other stocks in the consumer staples sector that have both a positive earnings ESP and a favorable Zacks Rank are:

J&J Snack Foods Corp (JJSF - Snapshot Report), with an Earnings ESP of + 2.67% and a Zacks Rank #2 (Buy).

Lorillard Inc(LO - Analyst Report), with an Earnings ESP of +1.18% and a Zacks Rank #2.

ConAgra Foods, Inc.(CAG - Analyst Report), with an Earnings ESP of +1.54% and a Zacks Rank #3 (Hold).

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