We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Will Sysco (SYY) Q2 Earnings Surprise Despite Headwinds?
Read MoreHide Full Article
Sysco Corporation (SYY - Free Report) is set to report second-quarter fiscal 2017 results before the opening bell on Feb 6. Last quarter, this global food products maker and distributor posted a positive earnings surprise of 13.56%.
In the trailing four quarters, the company beat earnings estimates in all the four quarters, which translated to an average positive surprise of 11.7%.
Let’s see how things are shaping up prior to this announcement.
Sysco Corporation Price, Consensus and EPS Surprise
A strong portfolio of businesses and robust acquisitions have remained the driving factors for the company. Sysco sales have been increasing consistently on the back of acquisitions and volume growth. Sysco’s expense management initiatives are aiding a reduction in administrative costs, thereby boosting operating profits. It is also encouraging to note that the company has delivered higher gross margins in the past one year, after witnessing a decline in the same since the last two fiscal years. It seems that Sysco’s growth strategy is paying off and its efforts to boost sales and margins are likely to impact results in the to-be-reported quarter.
In fact, Sysco’s shares have been outperforming the Zacks-categorized Food-Miscellaneous/Diversified industry over the past one year. The stock has increased significantly by 21.6% in comparison to the Zacks-categorized Food-Miscellaneous/Diversified industry, which recorded a growth of only 6.4%. 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).
However, Sysco expects food cost deflation and currency translation to impact its profits. The company experienced persistent deflation in the past fiscal in categories like center-of-the-plate protein which includes meat and seafood, along with the dairy, which management believes led to soft earnings growth. The deflationary trend is likely to pose a hurdle to sales and gross profits in the first half of fiscal 2017.
Earnings Whispers
Our proven model does not conclusively show that Sysco is likely to beat earnings this quarter. This 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 Sysco is 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate stand at 54 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Sysco’s Zacks Rank #3 increases the predictive power of ESP. However, the company’s ESP of 0.00% makes surprise prediction difficult.
We caution against Sell-rated stocks (#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 consumer staples sector, which are worth considering, as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Coty Inc. (COTY - Free Report) has an Earnings ESP of +8.33% and carries a Zacks Rank #3.
Sanderson Farms, Inc. has an Earnings ESP of +4.48% and carries a Zacks Rank #3.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017?
Who wouldn't? As of early December, the 2016 Top 10 produced 5 double-digit winners including oil and natural gas giant Pioneer Natural Resources which racked up a stellar +50% gain. The new list is painstakingly hand-picked from 4,400 companies covered by the Zacks Rank.Be among the very first to see it>>
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Will Sysco (SYY) Q2 Earnings Surprise Despite Headwinds?
Sysco Corporation (SYY - Free Report) is set to report second-quarter fiscal 2017 results before the opening bell on Feb 6. Last quarter, this global food products maker and distributor posted a positive earnings surprise of 13.56%.
In the trailing four quarters, the company beat earnings estimates in all the four quarters, which translated to an average positive surprise of 11.7%.
Let’s see how things are shaping up prior to this announcement.
Sysco Corporation Price, Consensus and EPS Surprise
Sysco Corporation Price, Consensus and EPS Surprise | Sysco Corporation Quote
Factors to Consider this Quarter
A strong portfolio of businesses and robust acquisitions have remained the driving factors for the company. Sysco sales have been increasing consistently on the back of acquisitions and volume growth. Sysco’s expense management initiatives are aiding a reduction in administrative costs, thereby boosting operating profits. It is also encouraging to note that the company has delivered higher gross margins in the past one year, after witnessing a decline in the same since the last two fiscal years. It seems that Sysco’s growth strategy is paying off and its efforts to boost sales and margins are likely to impact results in the to-be-reported quarter.
In fact, Sysco’s shares have been outperforming the Zacks-categorized Food-Miscellaneous/Diversified industry over the past one year. The stock has increased significantly by 21.6% in comparison to the Zacks-categorized Food-Miscellaneous/Diversified industry, which recorded a growth of only 6.4%. 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).
However, Sysco expects food cost deflation and currency translation to impact its profits. The company experienced persistent deflation in the past fiscal in categories like center-of-the-plate protein which includes meat and seafood, along with the dairy, which management believes led to soft earnings growth. The deflationary trend is likely to pose a hurdle to sales and gross profits in the first half of fiscal 2017.
Earnings Whispers
Our proven model does not conclusively show that Sysco is likely to beat earnings this quarter. This 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 Sysco is 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate stand at 54 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Sysco’s Zacks Rank #3 increases the predictive power of ESP. However, the company’s ESP of 0.00% makes surprise prediction difficult.
We caution against Sell-rated stocks (#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 consumer staples sector, which are worth considering, as our model shows that they have the right combination of elements to post an earnings beat this quarter:
ConAgra Foods, Inc. (CAG - Free Report) has an Earnings ESP of +4.55% and carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Coty Inc. (COTY - Free Report) has an Earnings ESP of +8.33% and carries a Zacks Rank #3.
Sanderson Farms, Inc. has an Earnings ESP of +4.48% and carries a Zacks Rank #3.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017?
Who wouldn't? As of early December, the 2016 Top 10 produced 5 double-digit winners including oil and natural gas giant Pioneer Natural Resources which racked up a stellar +50% gain. The new list is painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. Be among the very first to see it>>