Markets

Kraft Heinz (KHC): What Will Q2 Earnings Release Unveil?

The Kraft Heinz CompanyKHC is scheduled to report second-quarter 2016 results on Aug 4, after the closing bell. Last quarter, the company delivered a positive earnings surprise of 19.67%.

The packaged food manufacturer delivered positive earnings surprises in three of the past four quarters with an average surprise of 4.46%.

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

KRAFT HEINZ CO Price and EPS Surprise

KRAFT HEINZ CO Price and EPS Surprise | KRAFT HEINZ CO Quote

Factors to Consider

Kraft Heinz has been seeing top-line weakness over several past quarters. The company is witnessing lower volumes and share losses in the U.S. due to weak category trends. Reduced spending by the U.S. shoppers and a shift in consumer preference toward natural and organic ingredients over packaged and processed food has been hurting the company's business. Category trends and market share performance are likely to remain under pressure in the second quarter and through the rest of 2016.

Despite relatively soft sales, cost savings have led to better margins, primarily in the developed markets of the U.S. and Europe. We expect the trend to continue in the second quarter. A part of these savings are being re-invested in the business for innovation, brand building and marketing to stimulate top-line growth.

Earnings Whispers

Our proven model does not conclusively show that Kraft Heinz 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.

Zacks ESP: The Earnings ESP is 2.82% as the Most Accurate estimate stands at 73 cents while the Zacks Consensus Estimate is pegged lower at 71 cents.

Zacks Rank: Kraft Heinz has a Zacks Rank #4.

Note that we caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Some stocks in the consumer staples sector that have both a positive Earnings ESP and a favorable Zacks Rank include:

The J. M. Smucker Company SJM , with an Earnings ESP of +4.07% and a Zacks Rank #1 (Strong Buy).

Post Holdings, Inc. POST , with an Earnings ESP of 12.5% and a Zacks Rank #2 (Hold).

Omega Protein Corp. OME , with an Earnings ESP of +2.13% and a Zacks Rank #1.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

SMUCKER JM (SJM): Free Stock Analysis Report

OMEGA PROTEIN (OME): Free Stock Analysis Report

POST HOLDINGS (POST): Free Stock Analysis Report

KRAFT HEINZ CO (KHC): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

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.

In This Story

POST KHC SJM

Other Topics

Earnings Stocks