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Can SodaStream (SODA) Spring a Surprise in Q4 Earnings?

SodaStream International Ltd.SODA is slated to report fourth-quarter 2016 results on Feb 15, before the opening bell.

Last quarter, the Israel-based manufacturer of household soda posted a positive earnings surprise of 187.5%. The company also clocked positive earnings surprises in all of the past four quarters, the average surprise being 104.2%.

Let's see how things are shaping up prior to this announcement.

Factors to Consider

SodaStream has been witnessing good tidings since the release of Q3 results, with the stock price hitting new 52 week highs multiple times.

After two difficult years, this beverage stock staged a comeback in 2016 on its sparkling water brand. Through the first nine months of 2016, the company generated profits of $1.35 per share, a 206.8% increase year over year on revenue increase of just 14.7%. This highlights the company's strong business model and operating leverage, with its ability to control costs.

The growing popularity of sparkling water is driving SodaStream, as its cost effective beverage carbonation systems help consumers transform ordinary tap water into soft drinks and sparkling water. Sparkling water maker unit sales, which rose 23% to 788,000 in the last reported third quarter, can be expected to increase further in the soon-to-be-reported quarter.

Estimates have also been trending higher. Over the past 90 days, positive revisions have helped raise the consensus estimate by 6.9% for SodaStream to 31 cents per share for the to-be-reported quarter. Additionally, quarter earnings are expected to increase over 27% on a year-over-year basis. Estimates have also risen 12.8% for 2016 to $1.69 and are expected to increase 65.4% on a year-over-year basis.

However, currency translation remains a major headwind since a large part of its business is concentrated in Europe and U.S.

Earnings Whispers

Our proven model does not conclusively show that SodaStream is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

SodaStream International Ltd. Price and EPS Surprise

SodaStream International Ltd. Price and EPS Surprise | SodaStream International Ltd. Quote

Zacks ESP: SodaStream has an Earnings ESP of 0.00%. That is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 31 cents. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks Rank: SodaStream has a Zacks Rank #3 which increases the predictive power of ESP. However, the company's 0.00% ESP makes surprise prediction difficult.

Meanwhile, 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.

Stocks to Consider

Here are some companies in the broader consumer discretionary sector you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:

Extended Stay America, Inc. STAY , with an Earnings ESP of +21.43% and a Zacks Rank #1, is slated to release its quarterly numbers on Feb 28. You can see the complete list of today's Zacks #1 Rank stocks here .

Marriott International MAR , with an Earnings ESP of +2.41% and a Zacks Rank #3, is expected to report its quarterly numbers on Feb 15.

Hyatt Hotels Corporation H , with an Earnings ESP of +12.5% and Zacks Rank #3, is likely to release its quarterly numbers on Feb 16.

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Marriott International (MAR): Free Stock Analysis Report

Hyatt Hotels Corporation (H): Free Stock Analysis Report

SodaStream International Ltd. (SODA): Free Stock Analysis Report

Extended Stay America, Inc. (STAY): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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