Tyson Foods, Inc.TSN is set to report second-quarter fiscal 2016 results on May 9. Last quarter, the company posted a positive earnings surprise of 32.18%.
Basically, the company reported positive surprises in two of the quarters, reaching the average surprise for the trailing four quarters to 2.84%.
Factors at Play
Tyson Foods' regular product innovations and strong momentum in most business lines have been driving sales for some time now.
Further, thegeneral shift of demand from red meat to low-calorie chicken and processed chicken products among health conscious consumers is helping the company boost sales in its chicken segment. Such factors should have a favorable impact on the second-quarter results.
Toward the end of fiscal 2015, Tyson Foods rolled out Hillshire Snacking nationally. It was well received by consumers contributed to category growth by driving new consumers into the Snacking segment. This should contribute to the top line.
Further, the integration of Hillshire Co. brands completed last fiscal is expected to boost profits in the quarter.
Our proven model does not conclusively show that Tyson Foods is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Zacks ESP: The Earnings ESP for Tyson Foods is 0.00% as the Most Accurate estimate and the Zacks Consensus Estimate are both pegged at 92 cents.
Zacks Rank: Tyson Foods has a Zacks Rank #2 (Buy). Although the company has a favorable Zacks Rank, its 0.00% makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the 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 are:
AvonProducts Inc. AVP , with an Earnings ESP of +50.00% and a Zacks Rank #3 (Hold).
Hormel Foods Corporation. HRL , with an Earnings ESP of +5.26% and a Zacks Rank #1 (Strong Buy).
Service Corporation International. SCI , with an Earnings ESP of +6.67% and a Zacks Rank #2.