The Q3 earnings season is almost over, with 455 S&P 500 members, representing 91% of the index’s total market capitalization, having already reported their results.
As of Nov 11, total earnings of these companies were up 3.9% on a year-over-year basis (72.7% of the companies beat EPS estimates) while total revenue increased 2.7% (55.4% beat top-line expectations). The third quarter’s results are showing an improvement after five quarters of back-to-back declines. In fact, the pace of growth is expected to improve further in the coming days.
Overall third-quarter earnings for the S&P 500 companies are anticipated to be up 3.4% from the year-ago quarter on a 1.5% rise in revenues, per our Earnings Preview report.
Though we are witnessing sluggish growth at the energy, autos, transportation and technology sectors, the consumer sector comprising consumer staples and the consumer discretionary sector has been performing well, of late.
In the consumer staples sector, 84.4% companies have reported results as of Nov 11. Out of these, 74.1% companies posted an earnings beat, while 37.0% surpassed revenue estimates. Total earnings for the sector are expected to increase 6.6% on the back of 1.1% revenue growth and 0.7% higher margins, which might prove to be profitable in the long term.
In the consumer discretionary sector, out of 94.3% of the total number of S&P 500 companies that have reported results, 72.7% beat earnings while 45.5% surpassed revenue estimates. Efficient pricing, solid cost-reduction initiatives, lucrative acquisitions and efforts to enhance product portfolio cushion these companies from macroeconomic hurdles, consequently driving their bottom lines.
Consumer stocks like Blue Buffalo Pet Products Inc. , Edgewell Personnel Care Company (EPC - Free Report) and SP Plus Corporation (SP - Free Report) have delivered better-than-expected earnings in their recently reported quarters.
Let’s take a look at what’s in store for two consumer stocks which are scheduled to release their quarterly numbers on Nov 17.
Spectrum Brands Holdings, Inc. (SPB - Free Report) manufactures and sells consumer products worldwide. It operates under five segments: Global Batteries & Appliances, Global Pet Supplies, Home and Garden, Hardware & Home Improvement and Global Auto Care. The company is set to report fourth-quarter fiscal 2016 results before the market opens. It has delivered positive surprises in two of the trailing four quarters and negative surprises in the remaining two, with an average positive surprise of 5.63%.
The company has an Earnings ESP of -3.88% as the Most Accurate estimate of $1.24 is below the Zacks Consensus Estimate of $1.29. It has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Our proven model does not conclusively show that Spectrum Brands 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 or 3 (Hold) for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Spectrum Brands’ Zacks Rank #2 increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.
Matthews International Corporation (MATW - Free Report) , which provides brand solutions, memorialization products, and industrial products, is slated to release its fourth-quarter fiscal 2016 results after the market closes. The company has an Earnings ESP of 0.00% and a Zacks Rank #3. While a favorable Zacks Rank increases the predictive power of ESP, a 0.00% ESP makes surprise prediction difficult.
Last quarter, the company posted a positive earnings surprise of 7.78%. In the trailing four quarters, it posted an average positive surprise of 9.90%. The Zacks Consensus Estimate for fourth-quarter earnings is pegged at 98 cents.
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