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Food Stocks to Watch for Q4 Earnings on Feb 9: K, PPC, THS

HSY PPC GIS K PG

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The Q4 earnings season has so far seen quarterly releases from 40.6% of the consumer staples companies in the S&P 500 cohort. According to the latest Earnings Preview, 61.5% of the companies have surpassed earnings and 38.5% have beat revenue expectations.

Total earnings at these consumer staples companies increased 6.4% while revenues declined 1.3%. The sector is expected to report 8.2% earnings growth and 0.7% revenue growth in the fourth quarter of 2016.

Some of the key players in the sector – General Mills Inc. (GIS - Free Report) , The Procter & Gamble Company (PG - Free Report) and The Hershey Company (HSY - Free Report) – have already released their quarterly numbers. Hershey beat the Zacks Consensus Estimate for earnings by 8.3%, while sales missed the same in fourth-quarter 2016. General Mills’ second-quarter fiscal 2017 adjusted earnings and revenues missed the Zacks Consensus Estimate by 3.4% and 2.4%, respectively. Procter & Gamble’s second-quarter fiscal 2017 earnings and revenues exceeded expectations by a respective 1.9% and 0.3%.

Coming to the food industry within the consumer staples sector, the industry has seen sluggish growth and slowdown in consumption over the last few quarters. The industry is experiencing changes in consumer preference (for example, a shift toward products with less artificial sweeteners, sodium and saturated fat), changes in consumer dynamics (such as increased need for portable and on-the-go products), demographic shifts and also a shift in demand for lower-priced products.

Given this backdrop, let’s try to determine how these players – Kellogg Company (K - Free Report) , Pilgrim's Pride Corporation (PPC - Free Report) and Treehouse Foods, Inc. (THS) – are placed ahead of their earnings release on Feb 9.

Kellogg Company, the world's leading producer of cereal and convenience foods, is scheduled to report fourth-quarter 2016 results, before the opening bell.

Last quarter, the company posted a positive earnings surprise of 10.3%. The company surpassed estimates in all of the past four quarters and has an average positive surprise of 5.3%.

Currently, the company has an Earnings ESP of 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate stand at 85 cents 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 Kellogg is likely to beat earnings this quarter as per our model, a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 (Buy) or 3 to beat earnings (read more: : Can Kellogg Spring a Surprise this Earnings Season?)

Kellogg Company Price and EPS Surprise

 

For the fourth quarter, the Zacks Consensus Estimate for earnings is pegged at 85 cents, up 7.1% year over year. Meanwhile, the consensus estimate for revenues is at $3.10 billion, reflecting a 1.4% decrease.

Pilgrim's Pride, one of the largest chicken companies in the U.S., Mexico and Puerto Rico, is scheduled to report fourth-quarter 2016 results, after the market closes.

Last quarter, the company posted a negative earnings surprise of 26.4%. The company has a dismal earnings surprise history, with a negative average surprise of 18.2%, missing estimates each time over the trailing four quarters.

Currently, the company has a Zacks Rank #2 and an Earnings ESP of 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate stand at 37 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Thus, our model does not conclusively show an earnings beat for Pilgrim's Pride this quarter (read more: Pilgrim's Pride Q4 Earnings: What's in the Cards?)

Pilgrim's Pride Corporation Price and EPS Surprise

 

For the fourth quarter, the Zacks Consensus Estimate for earnings is pegged at 37 cents, up 42.3% year over year. Meanwhile, the consensus estimate for revenues is $1.93 billion, reflecting a 1.4% decrease.

Treehouse Foods, a food manufacturer, primarily serving the retail grocery and foodservice channels, is scheduled to report fourth-quarter 2016 results, before the opening bell.

After delivering in-line earnings in the second quarter, the company posted a negative earnings surprise of 9.1% in the third quarter. However, the company outpaced the Zacks Consensus Estimate by an average of 3.9% in the trailing four quarters.

Treehouse Foods has an Earnings ESP of 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at $1.08.

Meanwhile, though the company’s Zacks Rank #3 increases the predictive power of ESP, we need to have a positive ESP to be confident about an earnings surprise (read more: Treehouse Foods Q4 Earnings: What's in the Cards?)

Treehouse Foods, Inc. Price and EPS Surprise

 

For the fourth quarter, the Zacks Consensus Estimate for earnings is pegged at $1.08, up 0.2% year over year. Meanwhile, the consensus estimate for revenues is $1.76 billion, reflecting a 103% increase.

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