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4 Food & Beverage Stocks That Posted Great Q2 Earnings

Zacks Equity Research

The American food and beverage industry witnessed stellar gains in the quarter ended June 2019, thanks to growing consumer interest in ordering food online and opting for more variety in groceries. In fact, certain steps taken by food and beverage companies also pushed consumers to spend more on their products.

Let us thus take a look at a couple of food and beverage stocks from an investment angle as these posted strong earnings and revenues in Q2.

Food & Beverage Industry Trends Push Earnings

The remarkable growth displayed by food and beverage companies in the second quarter was the result of a few rising trends. A major trend witnessed in the food and beverage segment is direct-to-consumer distribution.

Per a CB Insights report, more food and beverage companies are now reaching out to consumers directly through their own online platforms rather than outsourcing their e-commerce to Amazon AMZN. This has helped them gain more popularity and in turn boosed their businesses.

Also, companies are investing in reaching their consumers via brick-and-mortar stores more. This helps them better understand consumer sentiment around consuming specific food and beverage products, which drove sales.

Secondly, these companies have ramped up their e-commerce product display. This change in strategy has boosted sales online, thanks to creative marketing. For example, organic food products company Daily Harvest displays its smoothies in clear cups on the website, although the product really comes in an opaque container.

In fact, the segment is up for witnessing better growth ahead. According to a Statista report, revenues in the food and beverages segment in the United States is expected to grow at a cumulative annual growth rate of 11% in the 2019-2023 period.

Top 4 Choices

We have selected four food and beverage companies for you to consider investing in. All of these companies have reported impressive earnings and revenues in the quarter ended June 2019.

Pilgrim’s Pride Corporation PPC is a leading global poultry and prepared foods company. The company gained from solid growth in the prepared foods business and its focus on expansion in the second quarter.

Pilgrim’s Pride reported quarterly adjusted earnings of 69 cents per share, which was 53% higher than the second-quarter 2018 figure. The company’s improved sales and margins were the biggest factors behind its higher earnings this time around. In fact, Pilgrim’s Pride generated net sales of $2,843.1 million in the quarter under review, up 0.2% on an annualized basis. Revenues from operations in the United States alone amounted to $1,916.9 million in Q2, 0.9% higher than the same quarter last year. (Read more)

Pilgrim’s Pride carries a Zacks Rank #1 (Strong Buy). Its expected earnings growth rate for the current year is 43% compared with the Zacks Food – Meat Products industry’s projected growth of 7.7%. In fact, the company’s stock price has already outperformed the Zacks Retail – Restaurants Market on a year-to-date basis (+88.9% vs +25.4%). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for its current-year earnings has risen 10.9% over the past 60 days.

Starbucks Corporation SBUX is a roaster and retailer of coffee and related products. The company’s strong growth in business and quarterly sales were a result of rise in sales in the United States and China and a better list of products. The coffee chain giant also gained immensely from its leading position in loyalty programs and digital capabilities.

Starbucks reported adjusted earnings of 78 cents per share, which beat the Zacks Consensus Estimate of 72 cents for its third-quarter fiscal 2019. Revenues were upbeat as well, with the coffee chain giant raking in $6,823 million in the said quarter. The top line surpassed the consensus estimate of $6,685 million as well. (Read more)

Starbucks carries a Zacks Rank #2 (Buy). Its expected earnings growth rate for the current year is 16.5% compared with the Zacks Retail - Restaurants industry’s projected growth of 5.4%. The stock price has already outperformed the Zacks Retail – Restaurants Market on a year-to-date basis (+48.1% vs +27.1%).

The Zacks Consensus Estimate for its current-year earnings has risen 1.4% over the past 60 days.

J & J Snack Foods Corp. JJSF is a leading brand in the snack food industry. The company offers nutritional and cost-effective branded snack foods and beverages.

The snacks giant reported quarterly earnings of $1.63 per share for the quarter ended June 2019, surpassing the Zacks Consensus Estimate of $1.54. The company’s revenues of $326.70 million for the said quarter also beat the Zacks Consensus Estimate by 4.38%. An increase in sales was the primary reason for the company’s impressive growth in earnings and revenues in the fiscal third quarter. (Read more)

J & J Snack Foods carries a Zacks Rank #2. Its expected earnings growth rate for the current year is 22.7% compared with the Zacks Food – Miscellaneous industry’s projected growth of 5.2%. In fact, the company’s stock price has already outperformed the Zacks Retail – Restaurants Market on a year-to-date basis (+25.4% vs +13.6%).

The Zacks Consensus Estimate for its current-year earnings has risen 1% over the past 60 days.

The Hershey Company HSY is a global confectionery leader and one of the largest manufacturers of chocolates in the world. Growth in the company’s capabilities and brands was the reason for its impressive earnings and revenues in the second quarter.

The company came out with quarterly earnings of $1.31 per share, which beat the Zacks Consensus Estimate of $1.18. In fact, the chocolate maker’s revenues of $1.77 billion for the quarter ended June 2019 also outpaced the Zacks Consensus Estimate by 0.26%. (Read more)

Hershey carries a Zacks Rank #2. Its expected earnings growth rate for the current year is 7.1%. In fact, the company’s stock price has already outperformed the Zacks Retail – Restaurants Market on a year-to-date basis (+41.5% vs +38.2%).

The Zacks Consensus Estimate for its current-year earnings has risen 0.7% over the past 60 days.

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Hershey Company (The) (HSY) : Free Stock Analysis Report
 
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Starbucks Corporation (SBUX) : Free Stock Analysis Report
 
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