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Sysco Corporation (SYY - Analyst Report) is set to report fourth-quarter fiscal 2014 results before the opening bell on Aug 11. Last quarter, this global food products maker and distributor posted in-line results. Let’s see how things are shaping up prior to the announcement.

Factors to Consider

The company’s growth strategy remains strong and its efforts to reduce costs and improve efficiency are appealing. The company has implemented several short-term steps and longer-term strategic initiatives to accelerate sales and mitigate the ongoing gross margin pressure. These initiatives are expected to yield results in the fiscal fourth quarter. The company also expects more progress over the next several months.

However, we cannot ignore the fact that the near-term fuel price hike and rise in input costs have been hurting margins. The company’s results are also dampened by a sluggish macro-economic scenario, which in turn leads to lower consumer spending. We continue to expect macro-economic headwinds and input cost pressure to hurt the upcoming quarter.

Earnings Whispers?

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

Negative Zacks ESP: The ESP for Sysco is -8.16% as the Zacks Consensus Estimate of 49 cents is higher than the Most Accurate Estimate of 45 cents.

Zacks Rank #4 (Sell): 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

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

Pinnacle Foods Inc (PF - Snapshot Report), with an Earnings ESP of +3.03% and a Zacks Rank #2 (Buy).  

Supervalu Inc (SVU - Analyst Report), with an Earnings ESP of +9.09% and a Zacks Rank #3 (Hold).  

Inventure Foods Inc (SNAK - Snapshot Report), with an Earnings ESP of +5.56% and a Zacks Rank #3.

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