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Food Stocks' Earnings Roster for Feb 11: KHC, TSN, K & More

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Ansuiya Mohta
·8 min read
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Players in the food space are largely seeing improvement in their retail businesses, thanks to burgeoning demand from elevated at-home consumption amid the pandemic.

With many Americans still staying at home and working remotely, demand for food products, especially packaged foods, has been rising. To maintain social distancing, consumers are reducing shopping trips and loading their pantries at once. Consequently, food companies have been witnessing increased demand from retail, mass merchants and supermarkets. Along with this, players in this space have been witnessing robust growth in e-commerce platforms as more consumers are buying online amid the pandemic. Such trends have been driving revenues of several food companies, which have been long focused on bolstering business through innovation, acquisitions and other brand-building efforts.

That said, foodservice businesses of many players have been affected by soft away-from-home demand due to social-distancing trends. Lower consumer traffic and other pandemic-induced restrictions have been adversely impacting away-from-home channels like restaurants, schools and lodging.

Moreover, several food companies have been facing disruptions in the supply-chain network amid the crisis. Some companies are witnessing margin pressure from coronavirus-driven costs. Nonetheless, consistent efforts to contain costs are likely to have offered some respite.

All said, let’s take a sneak peek at five food stocks, which are part of the broader Consumer Staples sector, and are slated to report financial results on Feb 11. Per the latest Earnings Preview, total earnings of the Zacks Consumer Staples sector are expected to rise 0.7% for the to-be-reported quarter, while revenues are likely to increase 2.4%.

According to the Zacks model, 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. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Here’s How Kraft Heinz is Placed

The Kraft Heinz Company KHC is witnessing higher demand from retail customers owing to greater at-home consumption trends. For fourth-quarter 2020, management expects organic net sales growth in mid-single-digit band compared with the year-ago quarter’s levels. Further, the company anticipates high-single-digit adjusted EBITDA growth on a constant-currency basis in the to-be-reported quarter. Apart from these, Kraft Heinz’s strategic endeavors like enhancement of supply chain and cost savings are noteworthy. Also, the company is undertaking efforts to boost the e-commerce channel.

However, Kraft Heinz is struggling with higher selling, general and administrative expenses. Moreover, the company is incurring adverse key commodity costs and higher COVID-related costs globally. Also, negative impacts from unfavorable currency fluctuation cannot be ignored.

Our proven model does not conclusively predict an earnings beat for Kraft Heinz this season. The company has a Zacks Rank #3 and an Earnings ESP of -1.02%. (Read More: Here's How Kraft Heinz Looks Ahead of Q4 Earnings)

The Kraft Heinz Company Price and EPS Surprise

The Kraft Heinz Company Price and EPS Surprise
The Kraft Heinz Company Price and EPS Surprise

The Kraft Heinz Company price-eps-surprise | The Kraft Heinz Company Quote

Is a Beat in Store for Tyson Foods?

Tyson Foods, Inc.’s TSN first-quarter fiscal 2021 results are likely to reflect rising demand in its retail channel, thanks to increased at-home consumption. The e-commerce channel has also been performing well as more consumers are buying online to maintain social distancing. Also, Tyson Foods is benefiting from its brand strength, robust geographical reach and the ability to manufacture locally in international markets as well as cater to evolving global demand.

Though the company is seeing increased retail demand, foodservice demand is affected by below normal operations at schools and cafeterias. These factors along with increased staff absenteeism amid the pandemic have been raising costs and complexities related to the company’s operations in the United States and Europe. The company, during its last earnings call, stated that it expects to continue facing pandemic-related hurdles in the first half of fiscal 2021. Tyson Foods expects food and protein demand to shift among different sales networks and apprehends short-term hiccups amid the pandemic. These headwinds are likely to build pressure on volumes in fiscal 2021 that also raise concerns regarding the quarter under review.

Our proven model predicts an earnings beat for Tyson Foods this season. The company has a Zacks Rank #3 and an Earnings ESP of +0.16%. (Read More: Everything You Must Know Before Tyson Foods' Q1 Earnings)

Tyson Foods, Inc. Price and EPS Surprise

Tyson Foods, Inc. Price and EPS Surprise
Tyson Foods, Inc. Price and EPS Surprise

Tyson Foods, Inc. price-eps-surprise | Tyson Foods, Inc. Quote

What’s in the Offing for Kellogg?

Higher demand for packaged food owing to pandemic-led rise in at-home consumption is working well for Kellogg Company’s K retail channel business and helping it counter declines in food sold in the away-from-home network.

In its last earnings call, management stated that it expects the away-from-home business to remain soft, though the trend is anticipated to moderate in fourth-quarter2020. Moreover, Kellogg highlighted that it expects at-home demand and emerging markets growth rate to have decelerated during the quarter under review. Apart from this, the company is incurring elevated costs related to operations amid the pandemic. Also, Kellogg had pushed certain investments related to brands, supply chain and commercial plans to the second half of 2020. Consequently, management expects advertising and consumer promotion investments to have increased double-digits in the fourth quarter.

Our proven model does not conclusively predict an earnings beat for Kellogg this season. The company has a Zacks Rank #4 (Sell) and an Earnings ESP of +0.03%. (Read More: Kellogg Queued for Q4 Earnings: What's in the Offing?)

Kellogg Company Price and EPS Surprise

Kellogg Company Price and EPS Surprise
Kellogg Company Price and EPS Surprise

Kellogg Company price-eps-surprise | Kellogg Company Quote

What’s in the Cards for Pilgrim's Pride?

Pilgrim's Pride Corporation’s PPC fourth-quarter 2020 results are likely to reflect gains from solid retail demand in the European business that is helping the company negate the adverse impacts of lower foodservice business amid the COVID-19 crisis. Also, better operational efficiencies and solid pork exports to China are significant upsides. Moreover, improved momentum from the recently-acquired European pork assets is aiding the company. Further, the company’s focus on refining its portfolio along with creating competitive advantages, especially amid the coronavirus-led disruptions, bodes well.

However, Pilgrim's Pride is grappling with increased cost of sales for the past few quarters. Also, lower demand for foodservice products and commodity pricing volatility amid the COVID-19 pandemic are concerning for the company’s U.S. operations. Although the company is seeing a rebound in demand with impressive growth in the retail and quick-service restaurant (or QSR) business, volatility and a challenging environment in commodity segments are persistent concerns.

Our proven model does not conclusively predict an earnings beat for Pilgrim's Pride this season. The company sports a Zacks Rank #1 and an Earnings ESP of 0.00%. (Read More: Pilgrim's Pride to Report Q4 Earnings: Things to Note)

Pilgrims Pride Corporation Price and EPS Surprise

Pilgrims Pride Corporation Price and EPS Surprise
Pilgrims Pride Corporation Price and EPS Surprise

Pilgrims Pride Corporation price-eps-surprise | Pilgrims Pride Corporation Quote

What’s in Store for Flowers Foods?

Flowers Foods, Inc. FLO is gaining from burgeoning demand owing to rising stay-at-home eating trend amid the coronavirus outbreak. Moreover, the company’s supply-chain initiatives, product optimization and restructuring actions are helping it stay afloat amid this crisis. Also, strength in Nature's Own, Dave's Killer Bread and Wonder brands along with favorable price/mix have been yielding favorable results.

However, Flowers Foods’ foodservice performance is under pressure due to social-distancing trends. To this end, the company is witnessing declines in most categories of its non-retail business— mainly food service, schools and other institutions. Apart from this, it is struggling with higher adjusted selling, distribution and administrative expenses (as a percentage of sales) as well as increased start up costs for a while now. These factors are likely to have had an impact on the company’s fourth-quarter 2020 performance.

Our proven model does not conclusively predict an earnings beat for Flowers Foods this season. The company carries a Zacks Rank #4 and an Earnings ESP of 0.00%. (Read More: Flowers Foods to Post Q4 Earnings: What's in Store?)

Flowers Foods, Inc. Price and EPS Surprise

Flowers Foods, Inc. Price and EPS Surprise
Flowers Foods, Inc. Price and EPS Surprise

Flowers Foods, Inc. price-eps-surprise | Flowers Foods, Inc. Quote

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Kellogg Company (K) : Free Stock Analysis Report

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The Kraft Heinz Company (KHC) : Free Stock Analysis Report

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