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Factors to Know Ahead of TreeHouse Foods' (THS) Q3 Earnings

Zacks Equity Research

TreeHouse Foods, Inc. THS is scheduled to report third-quarter 2019 numbers on Nov 7, before the opening bell. This manufacturer of packaged foods and beverages has a robust earnings surprise history, as its bottom line outperformed the Zacks Consensus Estimate by average of 15.6% over the trailing four quarters. In the last reported quarter, the company delivered positive earnings surprise of 24.1%.

The Zacks Consensus Estimate for third-quarter earnings has moved south by a penny over the past 30 days to 58 cents. This suggests a decline of 6.5% from the year-ago quarter’s reported figure.

For revenues, the consensus mark is pegged at $1,086 million, indicating a decrease of 22.1% from the figure reported in the year-ago quarter.

TreeHouse Foods, Inc. Price, Consensus and EPS Surprise

TreeHouse Foods, Inc. Price, Consensus and EPS Surprise

TreeHouse Foods, Inc. price-consensus-eps-surprise-chart | TreeHouse Foods, Inc. Quote

Key Factors to Note

TreeHouse Foods has been struggling with sluggish Baked Goods and Meal Solutions units, which have been hurting its top line for a while now. Notably, SKU rationalization efforts, adverse volume/mix and currency headwinds have been weighing on these segment sales. Also, McCann’s divestiture has been hurting sales at the Meals Solutions segment.

On the last earnings call, the company projected sales decline for the Baked Goods and Meals Solutions units in the third quarter. Also, management expects third-quarter 2019 net sales in the band of $1.04-$1.14 billion, while adjusted earnings is envisioned in the range of 52-62 cents.  

Nevertheless, the company is likely to have benefited from its TreeHouse 2020 strategic plan, which focuses on generating cost savings, managing portfolio, and optimizing production and supply chain. Additionally, TreeHouse Foods’ Structure to Win program (focused on aligning SG&A expenses with division structures) is expected to have aided its performance in the quarter under review.

What Our Model Says

Our proven model does not conclusively predict an earnings beat for TreeHouse Foods this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

TreeHouse Foods carries a Zacks Rank #3 and has an Earnings ESP of -1.54%.

Stocks With Favorable Combination

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:

Foot Locker, Inc. FL has an Earnings ESP of +2.80% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Grocery Outlet Holding Corp. GO has an Earnings ESP of +2.70% and a Zacks Rank #2.

Ollie's Bargain Outlet Holdings, Inc. OLLI has an Earnings ESP of +3.45% and a Zacks Rank #3.

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