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Can SodaStream (SODA) Spring a Surprise in Q3 Earnings?

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SodaStream International Ltd. (SODA - Free Report) is slated to report third-quarter 2016 results on Nov 10, before the opening bell.

Last quarter, the Israel-based manufacturer of household soda makers posted a positive earnings surprise of 94.74%. The company also clocked positive earnings surprises in all of the past four quarters, with an average surprise of 57.31%.

Let’s see how things are shaping up prior to this announcement.

SODASTREAM INTL Price and EPS Surprise



Factors to Consider

SodaStream makes soda/sparkling water machines and flavored syrups which are primarily sold at major retail stores like Kohl’s, Corp. (KSS - Free Report) , Macy’s, Inc. (M - Free Report) and Bed Bath & Beyond, Inc. (BBBY - Free Report) .

After reporting weak sales results in few past quarters due to low demand for its products, SodaStream reported strong numbers in the first and second quarter of 2016. Encouraged by its robust performance, the company also raised its revenue guidance for 2016.

The company registered an improvement in sales and profits in the first two quarters on the back of new flavors on the shelf and improved efficiency and operating performance from the fully-functional Lehavim production facility. This is expected to continue in the to-be-reported quarter as well.

The growth plan of the company, which focuses on transitioning from soda to a healthy water-based brand along with building a more efficient infrastructure, gained traction in the first half of 2016.

As part of the plan, the company rolled out a new range of natural water-enhanced flavors in the U.S. and some international markets last year. The company also introduced an automated Sparkling Water Maker, named Power, supporting the launch with an integrated marketing campaign, including TV, PR and digital, as well as improved retail execution.

Earnings Whispers

Our proven model does not conclusively show that SodaStream 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 is 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 24 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: SodaStream’s Zacks Rank #2 is favorable while a 0.00% ESP makes surprise prediction difficult. You can see the complete list of today’s Zacks #1 Rank stocks here.

Meanwhile, 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.

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