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What's in Store for Mead Johnson (MJN) in Q2 Earnings?
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Mead Johnson Nutrition Company is scheduled to report its second-quarter 2016 financial results on Jul 28, before the opening bell.
Last quarter, the company posted a positive earnings surprise of 3.57%. Further, Mead Johnson’s earnings outpaced the Zacks Consensus Estimate in two of the past four quarters, with an average beat of 0.81%.
Let’s see how things are shaping up prior to this announcement.
After a challenging 2015, Mead Johnson commenced this year’s journey with an optimistic outlook by delivering comparatively moderate results in the first quarter. An almost identical or a slightly better trend is expected from the yet-to-be reported second quarter.
Management is encouraged by the company’s Fuel for Growth strategy, which successfully reduced selling, general and administrative (SG&A) expenses by double digits in the first quarter. Going forward, management continues to assess opportunities to accelerate this cost-reduction plan, which we believe will get duly reflected in the second-quarter results.
As part of this initiative, management currently aims at reducing Mead Johnson’s advertising and promotion (A&P) expenditure along with other investments in demand creation, though the results of these steps are not expected before the end of 2016. Further, with the launch of its super-high-premium product in Apr 2016, management expects A&P as a percentage of sales to remain high in the second quarter.
In terms of its geographic bases, Mead Johnson has been recently observing record high market shares in Europe and Canada, with management expecting a similar trend to continue in the second quarter and beyond.
However, economic recessions plaguing Brazil and Venezuela, with the latter having an acute product shortage as well, have made it very tough for Mead Johnson to establish a strong business there. Unfortunately for the company, no respite is likely in the near term with management predicting very limited number of sales from these two countries in the second quarter and beyond.
Nevertheless, the company’s main focus in the emerging markets remains on China, wherein it launched its latest premium brand – Enfinitas, primarily targeting rich customers. Taking into account Mead Johnson’s earlier proven development in the Chinese paediatric market, we expect to see substantial growth in this region getting reflected in the second-quarter results..
Earnings Whispers
Our proven model does not conclusively show that Mead Johnson is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESPand a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: Mead Johnson has an Earnings ESP of 0.00%.That is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 79 cents.
Zacks Rank: Mead Johnson has a Zacks Rank #3, which increases the predictive power of ESP. However, a 0.00 % ESP makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies you may want to consider as our proven model shows they have the right combination of elements to post an earnings beat this quarter:
Bristol-Myers Squibb Company (BMY - Free Report) , with an Earnings ESP of +1.49% and a Zacks Rank #1.
GW Pharmaceuticals plc , with an Earnings ESP of +6.36% and a Zacks Rank #2.
Teligent, Inc. (TLGT - Free Report) , with an Earnings ESP of +100% and a Zacks Rank #2.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>
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What's in Store for Mead Johnson (MJN) in Q2 Earnings?
Mead Johnson Nutrition Company is scheduled to report its second-quarter 2016 financial results on Jul 28, before the opening bell.
Last quarter, the company posted a positive earnings surprise of 3.57%. Further, Mead Johnson’s earnings outpaced the Zacks Consensus Estimate in two of the past four quarters, with an average beat of 0.81%.
Let’s see how things are shaping up prior to this announcement.
MEAD JOHNSON NU Price and EPS Surprise
MEAD JOHNSON NU Price and EPS Surprise | MEAD JOHNSON NU Quote
Factors at Play
After a challenging 2015, Mead Johnson commenced this year’s journey with an optimistic outlook by delivering comparatively moderate results in the first quarter. An almost identical or a slightly better trend is expected from the yet-to-be reported second quarter.
Management is encouraged by the company’s Fuel for Growth strategy, which successfully reduced selling, general and administrative (SG&A) expenses by double digits in the first quarter. Going forward, management continues to assess opportunities to accelerate this cost-reduction plan, which we believe will get duly reflected in the second-quarter results.
As part of this initiative, management currently aims at reducing Mead Johnson’s advertising and promotion (A&P) expenditure along with other investments in demand creation, though the results of these steps are not expected before the end of 2016. Further, with the launch of its super-high-premium product in Apr 2016, management expects A&P as a percentage of sales to remain high in the second quarter.
In terms of its geographic bases, Mead Johnson has been recently observing record high market shares in Europe and Canada, with management expecting a similar trend to continue in the second quarter and beyond.
However, economic recessions plaguing Brazil and Venezuela, with the latter having an acute product shortage as well, have made it very tough for Mead Johnson to establish a strong business there. Unfortunately for the company, no respite is likely in the near term with management predicting very limited number of sales from these two countries in the second quarter and beyond.
Nevertheless, the company’s main focus in the emerging markets remains on China, wherein it launched its latest premium brand – Enfinitas, primarily targeting rich customers. Taking into account Mead Johnson’s earlier proven development in the Chinese paediatric market, we expect to see substantial growth in this region getting reflected in the second-quarter results..
Earnings Whispers
Our proven model does not conclusively show that Mead Johnson is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESPand a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: Mead Johnson has an Earnings ESP of 0.00%.That is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 79 cents.
Zacks Rank: Mead Johnson has a Zacks Rank #3, which increases the predictive power of ESP. However, a 0.00 % ESP makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies you may want to consider as our proven model shows they have the right combination of elements to post an earnings beat this quarter:
Bristol-Myers Squibb Company (BMY - Free Report) , with an Earnings ESP of +1.49% and a Zacks Rank #1.
GW Pharmaceuticals plc , with an Earnings ESP of +6.36% and a Zacks Rank #2.
Teligent, Inc. (TLGT - Free Report) , with an Earnings ESP of +100% and a Zacks Rank #2.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>