Heading into Q2 earnings season there is not very much optimism, as many are preparing for lower-than-expected results. With that being said, here are a few companies in the consumer staple industry, which is typically less volatile relative to other industries, that have the potential to outperform their peers. All the stocks in this article are currently a Zacks Rank #2 (Buy) and have a market cap larger than $10 billion.
General Mills Inc. GIS
Expected Earnings Date- September 17
General Mills is a multinational producer of branded consumer foods and currently owns over 90 leading U.S. brands, including Cheerios, Betty Crocker, Pillsbury, and Yoplait. The Minnesota-Headquartered firm is expected to have solid earnings growth the next two fiscal years and analyst revisions have trended upward lately, contributing to its Zacks Rank #2 (Buy). Our Zacks Consensus Estimates call for top line growth of 3.30% to fuel earnings growth of 4.66% in fiscal 2020-General Mills ended fiscal 2019 in May.
Looking further ahead, earnings are predicted to grow another 4.06%. GIS stock currently sits roughly 3% below its 52-week high that it hit last week. YTD, GIS is up 36%, significantly outperforming the S&P 500, which has gained 19%. General Mills has posted a positive earnings surprise in the four trailing quarters, for an average of 11.35%. General Mills and its predecessor firm have paid dividends for the past 119 years, so the stock seems like a relatively reliable choice for income investors. General Mills has paid out a yearly dividend of $1.96 for the past two years, and currently holds a 3.69% yield, which is the largest out of the stocks on this list.
McCormick & Company Inc. MKC
Expected Earnings Date- September 26
McCormick & Company is a Maryland based firm that specializes in spices, seasoning mixes, condiments, and other flavoring products. McCormick’s fiscal 2019 and 2020 EPS estimates have had 4 and 1 upward revisions, respectively, while both had 0 downward revisions over the past 60 days. These upward revisions have brought our Zacks Consensus Estimates for fiscal 2019 EPS to $5.31 and fiscal 2020 estimate to $5.63, more than a 5% increase for both estimates compared to their estimates a month ago.
These EPS estimates represent 6.84% growth in fiscal 2019 and another 6.06% growth in fiscal 2020. Over the same period, revenue is expected to grow to $5.53 billion in fiscal 2020, compared to $5.41 billion for fiscal 2018. YTD, MKC is up 14.8%, performing very closely to its industry. McCormick also offers a quarterly dividend, which it raised nearly 10% last quarter to $0.57.
Nestle SA NSRGY
Expected Earnings Date- Late July
Swiss multinational conglomerate Nestle was the largest food and beverage company by revenue as of 2018, and ranked 64 on the Global Fortune 500 list in 2017. Nearly 30 of Nestle’s brands have annual revenue of over $1 billion, these include Nespresso, Kit Kat, Nescafe, and Stouffer’s. Nestle is also one of the main shareholders of L’Oreal LRLCY.
Nestle is expected to post significant earnings growth over the next two fiscal years. Our Zacks Consensus Estimates call for fiscal 2019 earnings to grow 32.34%, on the back of 4.89% top-line expansion. Fiscal 2020 estimates forecast a further 3.56% revenue growth, along with 9.94% earnings growth. Those estimates bring fiscal 2020 revenue to $99.09 billion, representing 7.89% growth over the two years. Analyst estimates for Nestle’s earnings have trended completely in the right direction lately. YTD, NSRGY is up 28.1%, outperforming both its industry and the S&P 500.
The J.M. Smucker Company SJM
Expected Earnings Date- August 20
Based in Ohio, The J.M. Smucker Company is a producer of fruit spreads, ice cream toppings, beverages, and other products in North America. J.M. Smucker owns popular name brands such as Smucker’s, JIF, and Folgers. Smucker is not expected to see as big of growth as some of the other companies on this list, but SJM received a significant amount of upward earnings estimate revisions over the past 60 days.
Smucker’s EPS estimate received 5 upward estimate revisions for fiscal 2020 and 3 upward revisions for fiscal 2021 (SJM begins its fiscal year in May), against minimal downward changes. Our Zacks Consensus Estimates call for earnings to grow 2.90%, with revenues to gain 0.85% in fiscal 2020. Fiscal 2021 is predicted to have another 4.07% earnings growth, along with 1.65% revenue growth. SJM has fallen over 10% since its 52-week high of $128.43 in May, but the company is currently trading at a P/E of 13.37, significantly below its industry average of 17.6, which could mean its currently undervalued.
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L'Oreal SA (LRLCY) : Free Stock Analysis Report
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