Back to top

Analyst Blog

The Q3 earnings season is gradually nearing its end with nearly 91% of the S&P 500 companies already having announced their results. Although the bulk of earnings releases have already come from different sectors, approximately 45% of the retailers are yet to post their financial results.

Per our Earnings Preview report as of Nov 11, out of the 455 S&P 500 members that have come up with their quarterly numbers, approximately 72.7% posted positive earnings surprises, while 55.4% beat top-line expectations. On the other hand, 24 retailers in the S&P 500 index (out of the 43 total) have reported quarterly numbers and only 54.2% and 37.5% have surpassed earnings and revenue estimates, respectively.

According to the report, earnings for the 455 S&P 500 companies that have reported so far are up 3.9% from the same-period last year, while revenues have increased 2.7%.

Further, the report projects that earnings for the total S&P 500 companies will improve 3.4% from the year-ago period with total revenue rising 1.5%. The quarter has been increasingly heading toward an improvement after five straight quarters of earnings decline. This period is a significant one with both earnings and revenues on the growth trajectory.

The food sector is part of the consumer staples sector, which has so far reported decent earnings this season. Food stocks in particular are doing well in the third quarter. Leading firms from the industry like The Hershey’s Company (HSY - Free Report) , Pinnacle Foods, Inc. (PF - Free Report) , B&G Foods, Inc. (BGS - Free Report) , Mondelez International, Inc. (MDLZ - Free Report) , Kellogg Co. (K - Free Report) and many others have delivered better-than-expected Q3 earnings results despite currency headwinds and the sluggishness in emerging markets. Domestic business of these food companies has particularly fared well, aided by an improving economic and consumer spending environment in the U.S.

Let’s take a look at what’s in store for two food stocks which are scheduled to release their quarterly numbers on Nov 17.

The J. M. Smucker Company (SJM - Free Report) is set to report second-quarter fiscal 2017 results before the opening bell. Last quarter, this food products manufacturer delivered a positive surprise of 6.3%. We note that the company posted positive earnings surprises in all the last four quarters, translating to an average positive surprise of 19. 5%.

SMUCKER JM Price, Consensus and EPS Surprise

SMUCKER JM Price, Consensus and EPS Surprise | SMUCKER JM Quote

Strong organic sales growth, product innovation and constant efforts to expand through acquisitions are the company’s strong points. Further, lower coffee prices owing to the continued decline in green coffee costs are aiding the company’s volumes. Lower pricing on Folgers roast and ground coffee has resulted in improved performance for the mainstream coffee business in fiscal 2016. In fact, management expects momentum in the coffee business to continue in second-quarter fiscal 2017.

The acquisition of pet food maker, Big Heart Pet Brand has placed Smucker in the fastest growing pet food and snacks category in the U.S. Additionally, the divestiture of its U.S. canned milk brands and operations (in Dec 2015) to Eagle Family Foods Group has allowed the company to focus on its key brands and growth opportunities.

The acquisition of Big Heart Pet Brand, the launch of Dunkin Donuts K-cup pods and expanding distribution of the Natural Balance pet brand are anticipated to contribute to the top line in fiscal 2017. (Read more: Will Coffee Business Aid J.M. Smucker's Q2 Earnings?)

Earlier, the company had a positive Earnings ESP of +2.87% but currently it has come down to -1.03%. The Zacks Consensus Estimate for the quarter is pegged at $1.94. J. M. Smucker carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Post Holdings, Inc. (POST - Free Report) , a manufacturer, marketer and distributor of branded ready-to-eat cereals in the U.S., Canada, Puerto Rico, Mexico and the Caribbean is scheduled to release fourth-quarter fiscal 2016 results tomorrow. The company has an Earnings ESP of 0.00% and a Zacks Rank #4 (Sell). The Zacks Consensus Estimate is pegged at 43 cents. Additionally, the company has delivered an average positive earnings surprise of 40.6% in the trailing four quarters. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

POST HOLDINGS Price, Consensus and EPS Surprise

POST HOLDINGS Price, Consensus and EPS Surprise | POST HOLDINGS Quote

Where Do Zacks' Investment Ideas Come From?

You are welcome to download the full, up-to-the-minute list of 220 Zacks Rank #1 ""Strong Buy"" stocks free of charge. There is no better place to start your own stock search. Plus you can access the full list of must-avoid Zacks Rank #5 ""Strong Sells"" and other private research. See the stocks free >>