The Hershey Company
) is set to report first-quarter 2014 results on Apr 24, before
the market opens. Last quarter, the company delivered a positive
earnings surprise of 1.18%. We note that Hershey has outperformed
the Zacks Consensus Estimate in the trailing four quarters with
an average positive surprise of 2.59%.
Let's see how things are shaping up for this announcement.
Factors to Consider
Hershey had a strong 2013 buoyed by solid sales, margins,
productivity gains and improved efficiencies from supply chain
Hershey expects another year of top-line growth and margin
expansion in 2014. Volume growth is expected to be driven by
continued momentum in core brands, several product launches (in
both the U.S. and international markets) and leverage the
company's scale at retail. Further, Hershey plans to accelerate
investments in international markets and expects solid growth
from these markets in 2014.
However, in the first quarter, sales growth is expected to be
hurt by tough year-ago comparisons which included strong
distribution gains by Brookside. Brookside Foods Ltd. is a
British Columbia-based private confectionary company which
Hershey bought in 2012. Also, management expects low double-digit
increase in selling, general & administrative costs in the
first quarter which could pressurize margins.
Our proven model does not conclusively show that Hershey is
likely to beat earnings this quarter. That is because a stock
needs to have both a positive
and a Zacks Rank of #1, 2 or 3 for this to happen. That is not
the case here, as you will see below.
The Earnings ESP is 0.00%.
Hershey has a Zacks Rank #3 (Hold) which when combined with a
0.00% ESP makes surprise prediction difficult.
We caution against stocks with Zacks Rank #4 and 5 (Sell-rated
stocks) going into the earnings announcement, especially when the
company is seeing negative estimate revisions momentum.
Other Stocks to Consider
Other stocks in the consumer staples sector that have both a
positive Earnings ESP and a favorable Zacks Rank are:
General Mills, Inc.
) with Earnings ESP of +1.43% and a Zacks Rank #3.
The J.M. Smucker Co.
) with Earnings ESP of +1.72% and a Zacks Rank #3.
The Cheesecake Factory Inc.
), with an Earnings ESP of +2.04% and a Zacks Rank #3.
CHEESECAKE FACT (CAKE): Free Stock Analysis
GENL MILLS (GIS): Free Stock Analysis Report
HERSHEY CO/THE (HSY): Free Stock Analysis
SMUCKER JM (SJM): Free Stock Analysis Report
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