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Will Hershey (HSY) Earnings Disappoint Investors in Q3?
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The Hershey Company (HSY - Free Report) is slated to report third-quarter 2016 results on Oct 28, before the opening bell. Last quarter, the company posted a positive earnings surprise of 8.97%.
The chocolate maker surpassed earnings estimates in all the last four quarters, with an average surprise of 5.26%.
Factors to Consider
Hershey’s sales trends have been weak since 2014 due to weak category trends, increased competition from broader snacking category and soft international growth. The top-line weakness continued in 2016 with sales declining 1.4% in the first half of 2016 due to persistently weak demand in China and North America. Moreover, the company lowered its sales and earnings expectations for 2016 twice this year due to weak growth at the CMG category in North America and persistent macroeconomic challenges in China.
That said, management expects sales trends to improve in the second half driven by innovation and larger in-store merchandising and trade support.
For the third quarter, the Zacks Consensus Estimate for earnings is pegged at 95 cents, reflecting an increase of 3.3% year over year, while the consensus for revenues is at $586.9 million, implying 7.8% year-over-year growth.
Our proven model does not conclusively show that Hershey 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 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below.
Zacks ESP: The earnings ESP for Hershey is -1.70% as the Most Accurate estimate is $1.16 cents while the Zacks Consensus Estimate is pegged higher at $1.18. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
Zacks Rank: Hershey has a Zacks Rank #4 (Sell). Please note that we caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies in the broader consumer staples sector that can be considered as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Avon Products Inc. has an earnings ESP of +33.33% and a Zacks Rank #1. The company is expected to report third-quarter 2016 results on Nov 3.
J&J Snack Foods Corp. (JJSF - Free Report) has an earnings ESP of +2.46% and a Zacks Rank #3. The company is scheduled to report its quarterly numbers on Nov 3.
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Will Hershey (HSY) Earnings Disappoint Investors in Q3?
The Hershey Company (HSY - Free Report) is slated to report third-quarter 2016 results on Oct 28, before the opening bell. Last quarter, the company posted a positive earnings surprise of 8.97%.
The chocolate maker surpassed earnings estimates in all the last four quarters, with an average surprise of 5.26%.
Factors to Consider
Hershey’s sales trends have been weak since 2014 due to weak category trends, increased competition from broader snacking category and soft international growth. The top-line weakness continued in 2016 with sales declining 1.4% in the first half of 2016 due to persistently weak demand in China and North America. Moreover, the company lowered its sales and earnings expectations for 2016 twice this year due to weak growth at the CMG category in North America and persistent macroeconomic challenges in China.
That said, management expects sales trends to improve in the second half driven by innovation and larger in-store merchandising and trade support.
For the third quarter, the Zacks Consensus Estimate for earnings is pegged at 95 cents, reflecting an increase of 3.3% year over year, while the consensus for revenues is at $586.9 million, implying 7.8% year-over-year growth.
HERSHEY CO/THE Price and EPS Surprise
HERSHEY CO/THE Price and EPS Surprise | HERSHEY CO/THE Quote
Earnings Whispers
Our proven model does not conclusively show that Hershey 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 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below.
Zacks ESP: The earnings ESP for Hershey is -1.70% as the Most Accurate estimate is $1.16 cents while the Zacks Consensus Estimate is pegged higher at $1.18. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
Zacks Rank: Hershey has a Zacks Rank #4 (Sell). Please note that we caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies in the broader consumer staples sector that can be considered as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Avon Products Inc. has an earnings ESP of +33.33% and a Zacks Rank #1. The company is expected to report third-quarter 2016 results on Nov 3.
Cott Corporation , slated to report its quarterly numbers on Nov 10, has an earnings ESP of +33.33% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
J&J Snack Foods Corp. (JJSF - Free Report) has an earnings ESP of +2.46% and a Zacks Rank #3. The company is scheduled to report its quarterly numbers on Nov 3.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>