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SYY & TSN Slated to Report Earnings on May 7: Key Predictions
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Having moved halfway through this earnings season, we note that the picture so far is quite positive. Per the latest Earnings Outlook, dated May 2, 343 S&P 500 members have reported quarterly results. Well, 78.4% of these companies have delivered positive earnings surprises, while 75.8% beat top-line expectations. Earnings of these companies have increased 24% from the year-ago quarter, while revenues have risen 9.5%.
Further, the earnings trend report suggests that the top and the bottom line performances in this season are on track to mark the highest growth rate in seven years. As a whole, earnings for the S&P 500 companies are projected to improve 23.1% year over year on revenue growth of 8.6%. In fourth-quarter 2017, earnings and revenues rose 13.4% and 8.6%, respectively.
A Glimpse of the Consumer Staples Sector
The performance of the index is determined by all 16 Zacks sectors, all of which are expected to witness year-over-year earnings growth this season. The Consumer Staples sector is expected to record earnings growth of 7.3% and revenue increase of 3.9%.
The Consumer Staples sector is currently placed at the bottom 6% (15 of 16) of all Zacks sectors. Well, the segment has been grappling with headwinds such as rising input costs as well as intense competition that has increased promotional spending. This, in turn, has created significant pricing pressure. Thanks to such deterrents, the sector has lost 10.4% in a year, against the S&P 500 index’s gain of 9.8%.
Even amid such concerns, companies in the sector are trying to stay afloat through well-chalked innovations and other efforts to meet consumers’ changing tastes and preferences. Firms have been resorting to restructuring and cost-savings efforts to minimize the negative impacts of higher costs of operations and materials. Further, to consolidate their footing in this space and expand their portfolio, companies have been undertaking strategic buyouts.
That said, let’s see what’s in store for the following stocks when they release their quarterly results on May 7.
Our research shows that for stocks with the combination of a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP, the chance of a positive earnings surprise is high. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Surging Protein Food Demand Bodes Well For TSN
Tyson Foods, Inc. (TSN - Free Report) , that is slated to report second-quarter fiscal 2018 results, has long been cheering on rising demand for protein-rich products. Such a trend has led to significant growth in the company’s Beef, Chicken and Prepared Foods segments. Further, management expects demand for protein to continue rising and is well placed to exploit opportunities in the space. The company’s investments in Memphis Meats and Beyond Meat are the latest examples in this connection. It has also been bolstering its poultry production capacity. Such efforts combined with the acquisition of AdvancePierre and Original Philly indicate the company’s dedicated focus on augmenting protein-packed food products. Further, Tyson Foods also strives to enhance savings and induce operating efficiency through its Financial Fitness Program. (Read more: Will Protein Demand Drive Tyson Foods' Q2 Earnings?)
Driven by the aforementioned factors, the consensus mark for earnings in the to-be-reported quarter is currently pegged at $1.37, depicting a surge of 35.6% from the year-ago quarter’s figure. Further, analysts polled by Zacks expect net sales for the impeding quarter to be approximately $9,954 million, depicting a rise of almost 9.6% from the prior-year quarter’s tally.
However, Tyson Foods has been struggling with increased labor and freight expenses. Such headwinds are expected to linger and hurt performance in the second quarter as well. We also note that Tyson Foods has a mixed record of earnings surprises over the trailing four quarters. Also, this time around, the company has an Earnings ESP of -2.88%. Although the company’s Zacks Rank #3 increases the predictive power of ESP, a negative ESP makes surprise prediction difficult. You can see the complete list of today’s Zacks #1 Rank stocks here.
U.S. Foodservices Likely to Aid SYY
Sysco Corporation (SYY - Free Report) will be releasing third-quarter fiscal 2018 results. The company has been progressing well with U.S. Foodservices, wherein restaurant sales have been strong. Notably, local case volumes in this segment has been rising year over year for 15 consecutive quarters. Management expects a stronger second half, wherein it also anticipates favorable results in its International segment.
To top it, we remain encouraged about Sysco’s focus on its strategy for 2020, as it gives out positive signals for the quarter to be reported as well. In this regard, the company is focused on enhancing assortments, making constant innovations, ensuring food safety and revitalizing brands. Further, to evolve with the changing consumer preferences, Sysco is committed toward investing in technology and enhancing e-commerce operations.
Indeed, such well-spun strategies place Sysco well on the growth trajectory. That said, the consensus estimate for third-quarter earnings is pegged at 64 cents, which marks a solid 25.5% improvement from 51 cents recorded in the year-ago quarter. Further, the Zacks Consensus Estimate for overall sales is pegged at $14,382 million, up from $13,524 million recorded in the year-ago quarter.
However, the company has been incurring lower gross margin in the past two quarters, mainly stemming from higher inbound freight costs and food-cost inflation. Persistent hurdles like these are a threat to Sysco’s performance. Further, our proven model doesn’t show that Sysco is likely to beat bottom-line estimates this quarter. Though Sysco has an Earnings ESP of +0.63%, the company currently carries a Zacks Rank #4 (Sell). (Read more: Sysco Q3 Earnings: Can Core Strategies Pare Cost Woes?)
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
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SYY & TSN Slated to Report Earnings on May 7: Key Predictions
Having moved halfway through this earnings season, we note that the picture so far is quite positive. Per the latest Earnings Outlook, dated May 2, 343 S&P 500 members have reported quarterly results. Well, 78.4% of these companies have delivered positive earnings surprises, while 75.8% beat top-line expectations. Earnings of these companies have increased 24% from the year-ago quarter, while revenues have risen 9.5%.
Further, the earnings trend report suggests that the top and the bottom line performances in this season are on track to mark the highest growth rate in seven years. As a whole, earnings for the S&P 500 companies are projected to improve 23.1% year over year on revenue growth of 8.6%. In fourth-quarter 2017, earnings and revenues rose 13.4% and 8.6%, respectively.
A Glimpse of the Consumer Staples Sector
The performance of the index is determined by all 16 Zacks sectors, all of which are expected to witness year-over-year earnings growth this season. The Consumer Staples sector is expected to record earnings growth of 7.3% and revenue increase of 3.9%.
The Consumer Staples sector is currently placed at the bottom 6% (15 of 16) of all Zacks sectors. Well, the segment has been grappling with headwinds such as rising input costs as well as intense competition that has increased promotional spending. This, in turn, has created significant pricing pressure. Thanks to such deterrents, the sector has lost 10.4% in a year, against the S&P 500 index’s gain of 9.8%.
Even amid such concerns, companies in the sector are trying to stay afloat through well-chalked innovations and other efforts to meet consumers’ changing tastes and preferences. Firms have been resorting to restructuring and cost-savings efforts to minimize the negative impacts of higher costs of operations and materials. Further, to consolidate their footing in this space and expand their portfolio, companies have been undertaking strategic buyouts.
That said, let’s see what’s in store for the following stocks when they release their quarterly results on May 7.
Our research shows that for stocks with the combination of a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP, the chance of a positive earnings surprise is high. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Surging Protein Food Demand Bodes Well For TSN
Tyson Foods, Inc. (TSN - Free Report) , that is slated to report second-quarter fiscal 2018 results, has long been cheering on rising demand for protein-rich products. Such a trend has led to significant growth in the company’s Beef, Chicken and Prepared Foods segments. Further, management expects demand for protein to continue rising and is well placed to exploit opportunities in the space. The company’s investments in Memphis Meats and Beyond Meat are the latest examples in this connection. It has also been bolstering its poultry production capacity. Such efforts combined with the acquisition of AdvancePierre and Original Philly indicate the company’s dedicated focus on augmenting protein-packed food products. Further, Tyson Foods also strives to enhance savings and induce operating efficiency through its Financial Fitness Program. (Read more: Will Protein Demand Drive Tyson Foods' Q2 Earnings?)
Driven by the aforementioned factors, the consensus mark for earnings in the to-be-reported quarter is currently pegged at $1.37, depicting a surge of 35.6% from the year-ago quarter’s figure. Further, analysts polled by Zacks expect net sales for the impeding quarter to be approximately $9,954 million, depicting a rise of almost 9.6% from the prior-year quarter’s tally.
However, Tyson Foods has been struggling with increased labor and freight expenses. Such headwinds are expected to linger and hurt performance in the second quarter as well. We also note that Tyson Foods has a mixed record of earnings surprises over the trailing four quarters. Also, this time around, the company has an Earnings ESP of -2.88%. Although the company’s Zacks Rank #3 increases the predictive power of ESP, a negative ESP makes surprise prediction difficult. You can see the complete list of today’s Zacks #1 Rank stocks here.
U.S. Foodservices Likely to Aid SYY
Sysco Corporation (SYY - Free Report) will be releasing third-quarter fiscal 2018 results. The company has been progressing well with U.S. Foodservices, wherein restaurant sales have been strong. Notably, local case volumes in this segment has been rising year over year for 15 consecutive quarters. Management expects a stronger second half, wherein it also anticipates favorable results in its International segment.
To top it, we remain encouraged about Sysco’s focus on its strategy for 2020, as it gives out positive signals for the quarter to be reported as well. In this regard, the company is focused on enhancing assortments, making constant innovations, ensuring food safety and revitalizing brands. Further, to evolve with the changing consumer preferences, Sysco is committed toward investing in technology and enhancing e-commerce operations.
Indeed, such well-spun strategies place Sysco well on the growth trajectory. That said, the consensus estimate for third-quarter earnings is pegged at 64 cents, which marks a solid 25.5% improvement from 51 cents recorded in the year-ago quarter. Further, the Zacks Consensus Estimate for overall sales is pegged at $14,382 million, up from $13,524 million recorded in the year-ago quarter.
However, the company has been incurring lower gross margin in the past two quarters, mainly stemming from higher inbound freight costs and food-cost inflation. Persistent hurdles like these are a threat to Sysco’s performance. Further, our proven model doesn’t show that Sysco is likely to beat bottom-line estimates this quarter. Though Sysco has an Earnings ESP of +0.63%, the company currently carries a Zacks Rank #4 (Sell). (Read more: Sysco Q3 Earnings: Can Core Strategies Pare Cost Woes?)
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>