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SodaStream International (SODA) Q2 Earnings: What's in Store?

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SodaStream International Ltd. (SODA - Free Report) is slated to report second-quarter 2017 results on Aug 2, before the opening bell.

Last quarter, the Israel-based manufacturer of household soda posted a positive earnings surprise of 73.7%. The company also clocked positive earnings surprises in each of the last six quarters, averaging 103.2%. The chart below depicts the surprise history:

SodaStream International Ltd. Price and EPS Surprise

 

Additionally, a strong industry rank (Top 28% out of 265 industries) signals that SodaStream is likely to benefit from favorable broader market factors in the immediate future.

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

Factors to Consider

A look at estimate revisions lends us an idea of analyst expectations right before a company’s earnings release. The Zacks Consensus Estimate for second-quarter earnings per share remained stable over the past 30 days at 51 cents. This reflects a year-over-year increase of 37.8%. Further, analysts polled by Zacks expect revenues of $129.20 million for the said quarter, reflecting an 8.4% increase from a year ago. Meanwhile, the company expects revenue growth (on a reported basis) of 7% to 8%.

The growing popularity of sparkling water has been driving growth for SodaStream as its cost-effective beverage carbonation systems help consumers transform ordinary tap water into soft drinks and sparkling water. Sparkling water maker unit sales, which rose 22% in 2016 and 34% in the first quarter, can be expected to increase further in the soon-to-be-reported quarter.

However, currency translation is a major headwind since a large portion of its business is concentrated in Europe along with other countries outside the U.S.

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:  SodaStream has an Earnings ESP of 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 51 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: SodaStream has a Zacks Rank #3, which increases the predictive power of ESP. However, the company’s 0.00% ESP makes surprise prediction difficult.

Meanwhile, we caution against stocks with a Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some companies in the broader consumer discretionary sector you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:

Time Warner Inc. (TWX - Free Report) has an Earnings ESP of +1.68% and a Zacks Rank #1. It is slated to release its quarterly results on Aug 2.

The E. W. Scripps Company (SSP - Free Report) has an Earnings ESP of +33.33% and a Zacks Rank #2. The company is scheduled to report its quarterly results on Aug 3.You can see the complete list of today’s Zacks #1 Rank stocks here.

Lululemon Athletica Inc. (LULU - Free Report) , with an Earnings ESP of +14.29% and a Zacks Rank #3, is expected to report quarterly results on Sep 7.

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