A few Consumer Staples sector players are yet to release results this earnings season. The sector has been in good shape this season, courtesy of the burgeoning demand for essential products amid coronavirus-induced stay-at-home orders and social distancing.
Results of food companies like TreeHouse Foods, B&G Foods and Kraft Heinz to soap and cleaning material players like Clorox and Church & Dwight reflect a favorable impact of the trends. Food companies are particularly gaining from increased demand from retailers though some of them are facing challenges in the foodservice business. Also, coronavirus-led store and salon closures, and restricted air travel weighed on the performance of cosmetic giants like Coty (COTY - Free Report) and Estee Lauder (EL - Free Report) .
Nonetheless, things look quite well placed for the sector on an overall basis. Apart from the huge demand for essentials, contributions from buyouts, product innovation and other brand-building efforts worked well for consumer staple players. Further, stringent saving and restructuring efforts have been helping these companies tackle cost inflation as well as expenditures related to managing operations amid the COVID-19 crisis.
Notably, per the latest Earnings Preview report, the Consumer Staples sector is expected to see revenue growth of 4.8% and an earnings increase of 7.1% this quarter. In fact, the consumer staples universe has always been a go-to place for investors who want to play it safe during extreme market fluctuations.
All said, we have identified five consumer staple stocks, which are poised to beat the Zacks Consensus Estimate this earnings season, with the help of the Zacks Stock Screener. Our research shows that for stocks with the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), the chances of a positive earnings surprise are as high as 70%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
5 Solid Picks
United Natural Foods, Inc. (UNFI - Free Report) , a renowned distributor of natural, organic and specialty food and non-food products, looks promising now. The stock has a Zacks Rank #1 and an Earnings ESP of +51.21%. The Zacks Consensus Estimate for its third-quarter fiscal 2020 earnings is pegged at 93 cents, suggesting growth of 52.5% from the prior-year period’s reported figure. In a recent press release, United Natural released robust preliminary results for the third quarter, gaining from solid demand as customers are pantry loading amid the coronavirus outbreak. Also, to keep operating amid the crisis, the company is undertaking actions like additional hiring, temporary bonus payments and sanitization and safety measures for employees. Though these efforts entail high costs, the company is likely to have countered the same. You can see the complete list of today’s Zacks #1 Rank stocks here.
The J. M. Smucker Company (SJM - Free Report) , with a Zacks Rank #1 and an Earnings ESP of +1.67%, is worth betting on. The Zacks Consensus Estimate for its fourth-quarter fiscal 2020 earnings is pegged at $2.23 per share, suggesting growth of 7.2% from the prior-year quarter’s reported figure. This consumer food and beverage products, and pet food and pet snacks company has a trailing four-quarter positive earnings surprise of about 2%, on average. Notably, on Apr 20, Smucker raised its guidance for fiscal 2020, courtesy of increased demand in the fourth quarter. The company is slated to announce results on Jun 4.
The J. M. Smucker Company Price and EPS Surprise
Hormel Foods Corporation (HRL - Free Report) also deserves a mention. The stock has a Zacks Rank #3 and an Earnings ESP of +2.86%. The Zacks Consensus Estimate for its second-quarter 2020 earnings is pegged at 44 cents. This manufacturer and marketer of various meat and food products has a trailing four-quarter positive earnings surprise of 1.4%, on average. The company is slated to announce results on May 21.
Investors can also count on Campbell Soup Company (CPB - Free Report) , a convenience food products company, with a Zacks Rank #3 and an Earnings ESP of +11.70%. The Zacks Consensus Estimate for its third-quarter fiscal 2020 earnings is pegged at 70 cents, indicating a 25% increase from the prior-year quarter’s reported figure. The company has a trailing four-quarter positive earnings surprise of 12%, on average.
Campbell Soup Company Price and EPS Surprise
Another worthwhile option is Ollie's Bargain Outlet Holdings, Inc. (OLLI - Free Report) , with a Zacks Rank #3 and an Earnings ESP of +25.24%. The Zacks Consensus Estimate for its first-quarter 2020 earnings is pegged at 34 cents per share. This provider of houseware, food, health and beauty, and several other products is scheduled to report results on May 28.
Ollies Bargain Outlet Holdings, Inc. Price and EPS Surprise
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