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Food Stocks' Q1 Earnings Menu for May 3: K, PF, INGR
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U.S. food producers are striving to retain market share as easy-to-prepare and ready-to-eat food items are losing ground. A shift in consumer preference toward healthier options and a higher level of price consciousness are hurting the industry, making it hard for legacy brands to boost sales.
In order to combat weak sales, food majors are aggressively trying to improve their products through innovation as well as by pursuing strategic acquisitions and divestitures. They are channeling funds toward product and packaging innovation as well as reformulating a number of existing products to meet the rapidly changing consumer view on health and wellness. Apart from this, companies have adopted multi-year restructuring initiatives with a focus on improving operational efficiency to generate cost savings.
Therefore, though the companies’ sales have been relatively soft, cost savings have led to better margins. Again, savings are being re-invested in the business for innovation, brand building and marketing to stimulate top-line growth.
Among the food companies, Mondelez International, Inc. (MDLZ - Free Report) has already reported first-quarter 2018 results, wherein earnings and revenues surpassed the consensus mark. The company posted solid results on the back of strong performance from Asia, Middle East & Africa and Europe. Adjusted earnings grew 9.6% and revenues increased 5.5% from the year-ago level.
In March, McCormick & Company Inc. (MKC - Free Report) posted solid first-quarter fiscal 2018 results, with earnings and revenues outpacing the Zacks Consensus Estimate and improving year over year. The quarterly performance gained from positive acquisitions synergies, which led to growth in the consumer business and flavor solutions segments. General Mills, Inc. (GIS - Free Report) delivered in-line earnings and revenues in the third quarter of fiscal 2018. Meanwhile, the food giant has lowered its fiscal 2018 profit outlook to reflect higher supply chain costs.
Q1 Expectations
According to the latest Earnings Preview, results of 267 S&P 500 members are already out. As of Apr 27, 2018, total earnings for these S&P 500 members were up 25.1% year over year on more than 10% higher revenues. Of these, 76.8% surpassed earnings estimates, while 73.8% beat revenue expectations.
Total earnings for the S&P 500 index are likely to increase 22.6% from the same period last year on 8.4% higher revenues. For the Consumer Staples sector (which includes food stocks), the expected earnings and revenue growth is 6.8% and 3.1%, respectively, for the first quarter.
Let’s take a look at what’s in store for the following food stocks within the consumer staples sector that are scheduled to release first-quarter 2018 results on May 3.
Our research shows that when a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) stock has a positive Earnings ESP, the chance of beating earnings estimates is high.You may uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Kellogg Company (K - Free Report) is set to report results before the opening bell. In the last reported quarter, the company’s earnings met the Zacks Consensus Estimate. It surpassed expectations in three of the trailing four quarters, with the average beat being 5.82%.
The company’s top line remained subdued since 2014, primarily due to lower demand in North America. Particularly, sluggish performance of its cereal products in the developed markets as well as a soft U.S. snacks business have been affecting the company.
Nonetheless, given the tepid sales growth, the company is making aggressive efforts toward improving its food offerings. The company is investing in brand building, in-store capabilities, along with product and packaging innovation. Also, revenues are expected to benefit from Pringles’ improved performance in Europe, the Parati acquisition in Brazil, better shipments, and improvement in pricing and mix in Mexico and Australia.
Meanwhile, cost-saving initiatives like Project K and zero-based budgeting program are somewhat compensating for the sales decline.
Overall, the Zacks Consensus Estimate for total revenues of $3.32 billion indicates a 2% uptick on a year-over-year basis. The consensus estimate for first-quarter earnings is pegged at $1.08, reflecting a 1.9% year-over-year increase.
Our proven model does not show that Kellogg is likely to beat earnings estimates this quarter. Though Pinnacle Foods carries a Zacks Rank #3, its Earnings ESP of -0.90%, makes surprise prediction difficult.
Pinnacle Foods Inc. , a manufacturer, marketer and distributor of branded food products primarily in North America, is slated to release results before the opening bell.
The company delivered a negative earnings surprise in the last reported quarter, though it has outperformed the consensus mark by an average of 2.8% in the trailing four quarters.
Pinnacle Foods should continue gaining from its focus on acquisitions, innovations and robust brand portfolio. Though net sales in the quarter is expected to gain from early Easter, overall top line looks somewhat under pressure from hurdles like the exit of certain low-margin Aunt Jemima (“AJ”) products, the shutdown of Boulder UK operations and soft underlying sales. Nevertheless, the company’s solid productivity initiatives aimed at generating savings and improving gross margin are commendable.
The consensus estimate for first-quarter earnings is pegged at 56 cents, which marks an improvement of 12% from 50 cents recorded in the year-ago period. The Zacks Consensus Estimate for sales currently stands at $763.2 million, reflecting a decline from $766.1 million reported in the year-ago period.
Our proven model does not show that Pinnacle Foods is likely to beat earnings estimates this quarter. Though Pinnacle Foods carries a Zacks Rank #3, its Earnings ESP of -0.90%, makes surprise prediction difficult.
Ingredion Incorporated (INGR - Free Report) , a leading global provider of ingredient solutions to diversified industries,is slated to report results before the market opens. The company delivered a negative earnings surprise of 0.57% in the last reported quarter. It surpassed estimates in three of the past four quarters and has an average positive surprise of 3.31%.
The company’s continued growth in its specialty portfolio, disciplined cost management, and ongoing capital investments are likely to support margin expansion. Additionally, Ingredion has been exploring for potential M&A opportunities that drive specialty growth.
Our proven model does not conclusively show that Ingredion is likely to beat on earnings this quarter as it has an Earnings ESP of 0.00% (Most Accurate estimate and Zacks Consensus Estimate stand at $1.89) and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
For the first quarter, the Zacks Consensus Estimate for earnings is pegged at $1.89, reflecting a 0.5% year-over-year increase. Meanwhile, the consensus estimate for total revenues is pegged at $1.49 billion, implying 2.3% growth.
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Food Stocks' Q1 Earnings Menu for May 3: K, PF, INGR
U.S. food producers are striving to retain market share as easy-to-prepare and ready-to-eat food items are losing ground. A shift in consumer preference toward healthier options and a higher level of price consciousness are hurting the industry, making it hard for legacy brands to boost sales.
In order to combat weak sales, food majors are aggressively trying to improve their products through innovation as well as by pursuing strategic acquisitions and divestitures. They are channeling funds toward product and packaging innovation as well as reformulating a number of existing products to meet the rapidly changing consumer view on health and wellness. Apart from this, companies have adopted multi-year restructuring initiatives with a focus on improving operational efficiency to generate cost savings.
Therefore, though the companies’ sales have been relatively soft, cost savings have led to better margins. Again, savings are being re-invested in the business for innovation, brand building and marketing to stimulate top-line growth.
Among the food companies, Mondelez International, Inc. (MDLZ - Free Report) has already reported first-quarter 2018 results, wherein earnings and revenues surpassed the consensus mark. The company posted solid results on the back of strong performance from Asia, Middle East & Africa and Europe. Adjusted earnings grew 9.6% and revenues increased 5.5% from the year-ago level.
In March, McCormick & Company Inc. (MKC - Free Report) posted solid first-quarter fiscal 2018 results, with earnings and revenues outpacing the Zacks Consensus Estimate and improving year over year. The quarterly performance gained from positive acquisitions synergies, which led to growth in the consumer business and flavor solutions segments. General Mills, Inc. (GIS - Free Report) delivered in-line earnings and revenues in the third quarter of fiscal 2018. Meanwhile, the food giant has lowered its fiscal 2018 profit outlook to reflect higher supply chain costs.
Q1 Expectations
According to the latest Earnings Preview, results of 267 S&P 500 members are already out. As of Apr 27, 2018, total earnings for these S&P 500 members were up 25.1% year over year on more than 10% higher revenues. Of these, 76.8% surpassed earnings estimates, while 73.8% beat revenue expectations.
Total earnings for the S&P 500 index are likely to increase 22.6% from the same period last year on 8.4% higher revenues. For the Consumer Staples sector (which includes food stocks), the expected earnings and revenue growth is 6.8% and 3.1%, respectively, for the first quarter.
Let’s take a look at what’s in store for the following food stocks within the consumer staples sector that are scheduled to release first-quarter 2018 results on May 3.
Our research shows that when a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) stock has a positive Earnings ESP, the chance of beating earnings estimates is high.You may uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Kellogg Company (K - Free Report) is set to report results before the opening bell. In the last reported quarter, the company’s earnings met the Zacks Consensus Estimate. It surpassed expectations in three of the trailing four quarters, with the average beat being 5.82%.
The company’s top line remained subdued since 2014, primarily due to lower demand in North America. Particularly, sluggish performance of its cereal products in the developed markets as well as a soft U.S. snacks business have been affecting the company.
Nonetheless, given the tepid sales growth, the company is making aggressive efforts toward improving its food offerings. The company is investing in brand building, in-store capabilities, along with product and packaging innovation. Also, revenues are expected to benefit from Pringles’ improved performance in Europe, the Parati acquisition in Brazil, better shipments, and improvement in pricing and mix in Mexico and Australia.
Meanwhile, cost-saving initiatives like Project K and zero-based budgeting program are somewhat compensating for the sales decline.
Overall, the Zacks Consensus Estimate for total revenues of $3.32 billion indicates a 2% uptick on a year-over-year basis. The consensus estimate for first-quarter earnings is pegged at $1.08, reflecting a 1.9% year-over-year increase.
Our proven model does not show that Kellogg is likely to beat earnings estimates this quarter. Though Pinnacle Foods carries a Zacks Rank #3, its Earnings ESP of -0.90%, makes surprise prediction difficult.
(read more: Will Cost Saving Plans Benefit Kellogg in Q1 Earnings?)
Kellogg Company Price and EPS Surprise
Kellogg Company Price and EPS Surprise | Kellogg Company Quote
Pinnacle Foods Inc. , a manufacturer, marketer and distributor of branded food products primarily in North America, is slated to release results before the opening bell.
The company delivered a negative earnings surprise in the last reported quarter, though it has outperformed the consensus mark by an average of 2.8% in the trailing four quarters.
Pinnacle Foods should continue gaining from its focus on acquisitions, innovations and robust brand portfolio. Though net sales in the quarter is expected to gain from early Easter, overall top line looks somewhat under pressure from hurdles like the exit of certain low-margin Aunt Jemima (“AJ”) products, the shutdown of Boulder UK operations and soft underlying sales. Nevertheless, the company’s solid productivity initiatives aimed at generating savings and improving gross margin are commendable.
The consensus estimate for first-quarter earnings is pegged at 56 cents, which marks an improvement of 12% from 50 cents recorded in the year-ago period. The Zacks Consensus Estimate for sales currently stands at $763.2 million, reflecting a decline from $766.1 million reported in the year-ago period.
Our proven model does not show that Pinnacle Foods is likely to beat earnings estimates this quarter. Though Pinnacle Foods carries a Zacks Rank #3, its Earnings ESP of -0.90%, makes surprise prediction difficult.
(read more: Pinnacle Foods to Pare Input Costs Woes in Q1 Earnings?)
Pinnacle Foods Inc. Price and EPS Surprise
Pinnacle Foods Inc. Price and EPS Surprise | Pinnacle Foods Inc. Quote
Ingredion Incorporated (INGR - Free Report) , a leading global provider of ingredient solutions to diversified industries,is slated to report results before the market opens. The company delivered a negative earnings surprise of 0.57% in the last reported quarter. It surpassed estimates in three of the past four quarters and has an average positive surprise of 3.31%.
The company’s continued growth in its specialty portfolio, disciplined cost management, and ongoing capital investments are likely to support margin expansion. Additionally, Ingredion has been exploring for potential M&A opportunities that drive specialty growth.
Our proven model does not conclusively show that Ingredion is likely to beat on earnings this quarter as it has an Earnings ESP of 0.00% (Most Accurate estimate and Zacks Consensus Estimate stand at $1.89) and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
For the first quarter, the Zacks Consensus Estimate for earnings is pegged at $1.89, reflecting a 0.5% year-over-year increase. Meanwhile, the consensus estimate for total revenues is pegged at $1.49 billion, implying 2.3% growth.
Ingredion Incorporated Price and EPS Surprise
Ingredion Incorporated Price and EPS Surprise | Ingredion Incorporated Quote
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Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>