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Consumer Staples Stocks Feb 1 Earnings Roster: HI, ENR, TUP
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The Q4 earnings season is in full swing with 170 S&P 500 members having reported their quarterly numbers on Jan 27. Total earnings for these members are up 6% on 3.1% higher revenues, with 64.1% beating EPS estimates and 54.7% coming ahead of top-line expectations.
Investors seem to be happy as Q4 is on track to record the best performance in the last eight quarters. We note that earnings growth entered the positive territory in the third quarter of 2016, having seen a decline in the preceding five quarters. The pace of growth, which is currently modest, is however expected to improve further.
Overall fourth-quarter earnings for the S&P 500 companies are anticipated to be up 5.2% from the year-ago quarter on a 4.0% rise in revenues, as per the Earnings Preview.
At present, the strong sectors include finance, technology, construction, industrial products, basic materials and consumer discretionary. All the six sectors look promising and are delivering better than expected results in the current quarter. However, the consumer staples sector remains an exception.
It is likely that with the improvement and growth in the U.S. and global economy, investors might look for other prospective sectors than consumer staples, which is often considered a safe haven during economic downturns.
In consumer staples, 25% companies reported results as of Jan 27. Out of these, 50% posted an earnings beat while only 37.5% surpassed revenue estimates. While earnings improved 1.4% year over year, revenues declined 3.9%. We saw leading names like Procter & Gamble Company (PG - Free Report) and Kimberly-Clark Corporation (KMB - Free Report) deliver stellar quarterly results despite currency headwinds and sluggishness in emerging markets. McCormick & Co. (MKC - Free Report) beat Q4 earnings, while it missed on revenues.
Total earnings for the sector are expected to increase 9.5% on the back of 4.1% revenue growth and 0.6% higher margins.
Let’s see what awaits these three consumer staple stocks, which are scheduled to release their quarterly numbers on Feb 1.
Energizer Holdings, Inc. (ENR - Free Report) is slated to release its first-quarter fiscal 2017 results on Feb 1. Last quarter, it posted a positive earnings surprise of 8.00%. It has delivered an average positive earnings surprise of 34.24% over the trailing four quarters. The company has an Earnings ESP of -0.80% and a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Our proven model does not conclusively show that Energizer is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 (Buy) or 3 for this to happen. The company’s Zacks Rank #3 increases the predictive power of ESP. However, its negative ESP makes surprise prediction difficult. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Energizer has been innovating its product portfolio, cutting down on costs and making strategic acquisitions to boost financials. However, stiff competition from regional players and forex volatility are emerging as big concerns for Energizer. Also, management has cautioned that the first quarter will be marred by tougher year-over-year comparisons due to the timing of the holiday season last year and EcoAdvanced launch (read more: What to Expect when Energizer Reports Q1 Earnings?).
Moreover, in the past one year, Energizer’s shares have generated a positive return of 58.5% compared with the Zacks categorized Consumer Products-Miscellaneous Staples industry’s gain of 2.9%. Notably, the industry is part of the bottom 43% of the Zacks Classified industries (150 out of the 265). The broader Consumer Staples sector is placed at the bottom most of the Zacks Classified sectors (16 out of 16).
Hillenbrand Inc. (HI - Free Report) , a leader in the North American death care industry, is set to report first-quarter fiscal 2017 results before the market opens. Last quarter, this global diversified industrial company posted a positive earnings surprise of 1.75%. We note that it has posted two positive and two negative surprises in the trailing four quarters with an average negative surprise of 3.80%.
The company has an Earnings ESP of 0.00% as the Most Accurate estimate and the Zacks Consensus Estimate both stand at 40 cents. It has a Zacks Rank #5 (Strong Sell).
As it is we caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Hillenbrand’s focus on acquisitions, its global presence and margin expansion through operational improvement have been driving earnings since the past few quarters. However, the company is facing significant headwinds in key end markets across both segments of its business – Process Equipment Group and Batesville. The company experienced a decline in demand that was more severe than it had anticipated in 2016. Unfavorable currency, deficit environment for capital investments and a slowdown in some key markets, especially China, are the major challenges affecting the company. In terms of the key-end markets, the company expects some of these challenges to persist in 2017. The current political environment has created additional uncertainty globally (read more: Hillenbrand Q1 Earnings: Stock Likely to Disappoint?).
Over the past two years, shares of Hillenbrand increased 13.7%, which underperformed the Zacks categorized Funeral Services industry, which showcased growth of 19.9%. Notably, the industry is part of the bottom 4% of the Zacks Classified industries (255 out of the 265).
Next in consideration is Tupperware Brands Corporation (TUP - Free Report) . The Zacks Consensus Estimate for fourth-quarter 2016 is pegged at $1.37 per share. The company reported positive surprises in three of the last four quarters and a negative surprise in the other quarter, with an average positive surprise of 4.05%. However, this consumer staples stock carries a Zacks Rank #3 and has an Earnings ESP of -0.73%, which makes surprise prediction difficult.
In the past one year, shares of Tupperware have generated a positive return of 27.7% compared with the Zacks categorized Consumer Products-Miscellaneous Staples industry’s gain of 2.9%.
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Consumer Staples Stocks Feb 1 Earnings Roster: HI, ENR, TUP
The Q4 earnings season is in full swing with 170 S&P 500 members having reported their quarterly numbers on Jan 27. Total earnings for these members are up 6% on 3.1% higher revenues, with 64.1% beating EPS estimates and 54.7% coming ahead of top-line expectations.
Investors seem to be happy as Q4 is on track to record the best performance in the last eight quarters. We note that earnings growth entered the positive territory in the third quarter of 2016, having seen a decline in the preceding five quarters. The pace of growth, which is currently modest, is however expected to improve further.
Overall fourth-quarter earnings for the S&P 500 companies are anticipated to be up 5.2% from the year-ago quarter on a 4.0% rise in revenues, as per the Earnings Preview.
At present, the strong sectors include finance, technology, construction, industrial products, basic materials and consumer discretionary. All the six sectors look promising and are delivering better than expected results in the current quarter. However, the consumer staples sector remains an exception.
It is likely that with the improvement and growth in the U.S. and global economy, investors might look for other prospective sectors than consumer staples, which is often considered a safe haven during economic downturns.
In consumer staples, 25% companies reported results as of Jan 27. Out of these, 50% posted an earnings beat while only 37.5% surpassed revenue estimates. While earnings improved 1.4% year over year, revenues declined 3.9%. We saw leading names like Procter & Gamble Company (PG - Free Report) and Kimberly-Clark Corporation (KMB - Free Report) deliver stellar quarterly results despite currency headwinds and sluggishness in emerging markets. McCormick & Co. (MKC - Free Report) beat Q4 earnings, while it missed on revenues.
Total earnings for the sector are expected to increase 9.5% on the back of 4.1% revenue growth and 0.6% higher margins.
Let’s see what awaits these three consumer staple stocks, which are scheduled to release their quarterly numbers on Feb 1.
Energizer Holdings, Inc. (ENR - Free Report) is slated to release its first-quarter fiscal 2017 results on Feb 1. Last quarter, it posted a positive earnings surprise of 8.00%. It has delivered an average positive earnings surprise of 34.24% over the trailing four quarters. The company has an Earnings ESP of -0.80% and a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Our proven model does not conclusively show that Energizer is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 (Buy) or 3 for this to happen. The company’s Zacks Rank #3 increases the predictive power of ESP. However, its negative ESP makes surprise prediction difficult. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Energizer has been innovating its product portfolio, cutting down on costs and making strategic acquisitions to boost financials. However, stiff competition from regional players and forex volatility are emerging as big concerns for Energizer. Also, management has cautioned that the first quarter will be marred by tougher year-over-year comparisons due to the timing of the holiday season last year and EcoAdvanced launch (read more: What to Expect when Energizer Reports Q1 Earnings?).
Moreover, in the past one year, Energizer’s shares have generated a positive return of 58.5% compared with the Zacks categorized Consumer Products-Miscellaneous Staples industry’s gain of 2.9%. Notably, the industry is part of the bottom 43% of the Zacks Classified industries (150 out of the 265). The broader Consumer Staples sector is placed at the bottom most of the Zacks Classified sectors (16 out of 16).
Hillenbrand Inc. (HI - Free Report) , a leader in the North American death care industry, is set to report first-quarter fiscal 2017 results before the market opens. Last quarter, this global diversified industrial company posted a positive earnings surprise of 1.75%. We note that it has posted two positive and two negative surprises in the trailing four quarters with an average negative surprise of 3.80%.
The company has an Earnings ESP of 0.00% as the Most Accurate estimate and the Zacks Consensus Estimate both stand at 40 cents. It has a Zacks Rank #5 (Strong Sell).
As it is we caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Hillenbrand’s focus on acquisitions, its global presence and margin expansion through operational improvement have been driving earnings since the past few quarters. However, the company is facing significant headwinds in key end markets across both segments of its business – Process Equipment Group and Batesville. The company experienced a decline in demand that was more severe than it had anticipated in 2016. Unfavorable currency, deficit environment for capital investments and a slowdown in some key markets, especially China, are the major challenges affecting the company. In terms of the key-end markets, the company expects some of these challenges to persist in 2017. The current political environment has created additional uncertainty globally (read more: Hillenbrand Q1 Earnings: Stock Likely to Disappoint?).
Over the past two years, shares of Hillenbrand increased 13.7%, which underperformed the Zacks categorized Funeral Services industry, which showcased growth of 19.9%. Notably, the industry is part of the bottom 4% of the Zacks Classified industries (255 out of the 265).
Next in consideration is Tupperware Brands Corporation (TUP - Free Report) . The Zacks Consensus Estimate for fourth-quarter 2016 is pegged at $1.37 per share. The company reported positive surprises in three of the last four quarters and a negative surprise in the other quarter, with an average positive surprise of 4.05%. However, this consumer staples stock carries a Zacks Rank #3 and has an Earnings ESP of -0.73%, which makes surprise prediction difficult.
In the past one year, shares of Tupperware have generated a positive return of 27.7% compared with the Zacks categorized Consumer Products-Miscellaneous Staples industry’s gain of 2.9%.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>