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Pinnacle Foods (PF) Q4 Earnings: What Factors Are at Play?

Pinnacle Foods Inc.PF , a manufacturer and marketer of branded food products, is slated to report fourth-quarter 2016 results on Feb 23. The question lingering in investors' minds is, whether the company will be able to maintain its positive earnings streak in the to-be-reported quarter. The company has outpaced the Zacks Consensus Estimate in three of the past four quarters, with an average of 2.1%.

Pinnacle Foods forms part of the Consumer Staples sector. As per the latest Zacks Earnings Preview , the earnings growth for the sector looks impressive. Total earnings for the Consumer Staples sector are estimated to rise 10.9%, whereas revenues are projected to improve 4.1%.

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

Which Way are Estimates Treading?

Let's look at earnings estimate revisions in order to get a clear picture of what analysts are thinking about the company right before earnings release. We note that the current Zacks Consensus Estimate of 79 cents and $2.15 for the impending quarter and 2016 has increased by a penny in the past 30 days, and are higher than 70 cents and $1.92 delivered in the year-ago quarter and 2015, respectively. Analysts polled by Zacks expect revenues of $852.6 million, up roughly 18% from the prior-year period.

What the Zacks Model Unveils?

Our proven model does not conclusively show that Pinnacle Foods is likely to beat earnings estimates this quarter. This is because a stock needs to have both positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen.

Pinnacle Foods, Inc. Price, Consensus and EPS Surprise

Pinnacle Foods, Inc. Price, Consensus and EPS Surprise | Pinnacle Foods, Inc. Quote

Pinnacle Foods has an Earnings ESP of 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 79 cents. Although the company's Zacks Rank #2 increases the predictive power of ESP, but we need to have a positive ESP to be confident about an earnings surprise. You may uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Factors Influencing the Quarter

Pinnacle Foods actively manages its diverse portfolio of iconic food brands that enjoy strong household penetration in the U.S. Further, the company regularly undertakes product innovation in a bid to offer variety and maintain its market share.

Recently, management reaffirmed its 2016 earnings guidance, which is anticipated in the range of $2.13 to $2.15 per share and represents year-over-year growth of 11−12%. Further, the Boulder Brands acquisition is expected to contribute approximately 8−9 cents to adjusted earnings per share for the year. Boulder Brands is expected to contribute net sales in a range of $460−$480 million. Going forward, the benefits from this acquisition are expected to spread over 2016 and 2017.

The company also has an operational excellence program in place designed to generate annual productivity savings across the supply chain. These productivity savings, along with higher pricing have been mitigating the impact of input cost inflation to drive gross margins.

A glimpse at the company's share price reveals that the stock has notably outperformed the Zacks categorized Food - Miscellaneous/Diversified industry over the past one year. While the stock yielded 31.9%, the industry gained 9.8% in the said time frame.

However, the company's top-line has missed the Zacks Consensus Estimate in five back-to-back quarters. Further, the company remains apprehensive of incurring higher introductory costs related to product innovation. Additionally, increased consumer marketing investment, input cost inflation and currency headwinds are likely to weigh upon its margins.

Stocks Poised to Beat Earnings Estimates

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Burlington Stores, Inc. BURL has an Earnings ESP of +1.18% and sports a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here .

General Mills, Inc. GIS has an Earnings ESP of +1.41% and a Zacks Rank #3.

Best Buy Co., Inc. BBY has an Earnings ESP of +1.81% and a Zacks Rank #3.

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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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