We expect chocolate maker,
The Hershey Company
) to beat expectations when it reports fourth quarter and full
year 2012 results on Jan 31 before the market opens.
Why a Likely Positive Surprise?
Our proven model shows that Hershey's is likely to beat
earnings because it has the right combination of two key
Positive Zacks ESP:
Hershey's currently has an Earnings ESP (Read:
Zacks Earnings ESP: A Better Method
) of +1.33%.
Zacks #3 Rank (Neutral):
Note that stocks with Zacks Ranks of #1, #2 and #3 have a
significantly higher chance of beating earnings. The sell rated
stocks (#4 and #5) should never be considered going into an
earnings announcement. Hershey's currently carries a Zacks
Rank # 3 (Hold).
The combination of the stock's Zacks Rank #3 (Hold) and +1.33%
ESP makes us confident of a positive earnings beat on Jan 31.
What is Driving the Better Than Expected Earnings?
Holiday-driven spending, lower cost inflation, better pricing,
improving volumes and strong productivity are expected to lead to
a positive earnings surprise in the upcoming quarter.
Hershey has outperformed in all the quarters of 2012 and has
raised its guidance thrice in 2012, highlighting its attractive
earnings potential. Over the past 10 quarters, the company has
beaten estimates in 6 while it matched in 4. The outlook for 2013
is also encouraging, especially the expectation of no cost
inflation in the year.
Other Stocks to Consider
Hershey's is not the only bullish firm this earnings season.
We also see likely earnings beats coming from the following peers
in the consumer staples industry:
Flowers Foods, Inc.
): Earnings ESP of +4.00% and Zacks Rank #1 (Strong Buy).
ConAgra Foods, Inc.
): Earnings ESP of +3.64% and Zacks Rank #2 (Buy).
Cal-Maine Foods, Inc.
): Earnings ESP of +1.74% and Zacks Rank #3 (Hold).
CONAGRA FOODS (CAG): Free Stock Analysis
CAL-MAINE FOODS (CALM): Free Stock Analysis
FLOWERS FOODS (FLO): Free Stock Analysis
HERSHEY CO/THE (HSY): Free Stock Analysis
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