) is set to report its second-quarter 2013 results on Aug 1,
before the market opens. Last quarter, it reported in-line
results. Let's see how things are shaping up for this
Factors to Consider This Quarter
Overall, the second quarter is expected to be somewhat similar
to the first quarter. The first-quarter results were hurt by
sluggishness in the U.S. snacks business, higher commodity costs
and larger-than-expected currency headwinds. Accordingly, profits
declined and the company delivered lower-than-expected top
During the second quarter, the softness in the U.S. snacks
business is expected to continue. Thus, adjusted operating profit
is expected to be relatively flat year over year in the quarter
due to higher cost inflation, increased brand building
investments to support innovation and softness in snacks.
Our proven model does not conclusively show that Kellogg is
likely to beat earnings this quarter. That is because a stock
needs to have both a positive earnings ESP (Read:
Zacks Earnings ESP: A Better Method
) and a Zacks Rank of #1, 2 or 3 for this to happen. That is not
the case here, as you will see below.
Positive Zacks ESP:
The Earnings ESP is 1.03%.
Zacks #4 Rank (Sell):
Kellogg's Zacks #4 Rank (Sell) lowers the predictive power of ESP
because the Zacks #4 Rank, when combined with a positive ESP,
makes surprise prediction difficult. We caution against stocks
with Zacks Ranks #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
Here are some other companies in the consumer staples sector
that can be considered as our model shows that they have the
right combination of elements to post an earnings beat this
KELLOGG CO (K): Free Stock Analysis Report
PILGRIMS PRIDE (PPC): Free Stock Analysis
SANDERSON FARMS (SAFM): Free Stock Analysis
TYSON FOODS A (TSN): Free Stock Analysis
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Sanderson Farms, Inc.
), Earnings ESP of +5.66% and a Zacks Rank #2 (Buy).
Tyson Foods, Inc.
), Earnings ESP of +8.62% and a Zacks Rank #2 (Buy).
Pilgrim's Pride Corp.
), Earnings ESP of +3.57% and a Zacks Rank #2 (Buy)