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Can B&G Foods (BGS) Spring a Surprise this Earnings Season?

B&G Foods Inc. BGS is set to report second-quarter 2017 results on Aug 3, after market close.

Last quarter, this NJ-based shelf-stable and frozen food company posted a positive earnings surprise of 5.45%. However, the company surpassed estimates in three of the past four quarters, resulting in an average positive surprise of 1.95%.

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

Factors to Consider

A look at estimate revisions lends us an idea of analyst expectations right before a company’s earnings release. The Zacks Consensus Estimate for second-quarter earnings per share remained stable over the past 30 days at 49 cents. This reflects a year-over-year decrease of 41.9%. The stock also saw dismal trading over the past three months, with the share price slipping 11.7%.

B&G Foods’ weak base business growth raises concern. The company's base sales declined 2% in 2016 and 2.4% in the first quarter of 2017, thanks to declining unit volumes. Also, the North American food industry has been witnessing sluggish growth and slowdown in consumption over the last few quarters due to a shift in consumer preference toward healthier options.

Meanwhile, we are encouraged by the company’s aggressive acquisition strategy, cost-saving initiatives and productivity improvements. In 2016, the company's sales increased 44%, while in the first quarter it had risen 18.4%. Notably, the Zacks Consensus Estimate for revenues is pegged at $382.70 million, implying a 24.9% increase.

Earnings Whispers

Our proven model does not conclusively show that B&G Foods will beat estimates 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. But that is not the case here, as you will see below. You can see the complete list of today’s Zacks #1 Rank stocks here.

Zacks ESP: B&G Foods’ Earnings ESP is 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 49 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

B&G Foods, Inc. Price and EPS Surprise

 

Zacks Rank: B&G Foods has a Zacks Rank #3, which increases the predictive power of ESP. However, the company’s 0.00% ESP makes surprise prediction difficult.

Note that 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.

Peer Releases

General Mills Inc.’s GIS cost-saving initiatives have helped it post better-than-expected fourth-quarter fiscal 2017 results along with a solid increase in adjusted operating profit margin. Total revenues however declined 3% year over year owing to lower organic sales.

The Hershey Company HSY beat the Zacks Consensus Estimate for earnings and revenues in second-quarter 2017 by 19.8% and 0.7%, respectively.

Dr Pepper Snapple Group Inc. DPS reported second-quarter 2017 results, with earnings missing the Zacks Consensus Estimate by 2.3% and revenues beating the same by 1.7%.

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Dr Pepper Snapple Group, Inc (DPS): Free Stock Analysis Report
 
Hershey Company (The) (HSY): Free Stock Analysis Report
 
General Mills, Inc. (GIS): Free Stock Analysis Report
 
B&G Foods, Inc. (BGS): Free Stock Analysis Report
 
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