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Top 5 Consumer Staple Stocks Ahead of Q2 Earnings Results

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Nalak Das
·5 min read
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Disappointing performance in the coronavirus-impacted first-quarter 2020 earnings season is still continuing. The pandemic-induced economic disaster has taken a significant toll on corporate earnings.

However, the consumer staples sector has so far reported relatively better results despite the decline of overall sector's earnings year over year. This sector is likely to maintain this performance for the rest of this earnings season.  

Disappointing Second-Quarter Results & Projections 

As of Jul 29, 205 S&P 500 members reported second-quarter 2020 earnings results. Total earnings of these companies are down 40.2% from the same period last year on 7.6% lower revenues. Of the total, 76.1% surpassed EPS estimates and 64.9% outpaced revenue estimates.

Overall, second-quarter  earnings for the S&P 500 Index are projected to be down 41.1% year over year on 8.9% lower revenues. Notably, first-quarter earnings of companies on the S&P 500 Index were down 13.5% on 1.4% higher revenues. (Read More: An Improving Earnings Outlook Despite Covid-19 Concerns)

Consumer Staples Sector is Doing Relatively Better

The consumer staples sector includes companies that provide necessities and products for daily use. This makes the sector defensive in nature. Therefore, this has always been a go-to place for investors, who want to play it safe during extreme market fluctuations. Adding stocks from the consumer staples basket lends more stability to portfolios during uncertain market conditions.

As of Apr 29, 51.9% of the sector’s market cap in the S&P 500 companies has reported. Total earnings of these companies are down a mere 0.3% from the same period last year on 5.4% lower revenues.

Of the total, 91.7% have surpassed EPS estimates and 66.7% have outpaced revenue estimates. Notably, overall, second-quarter earnings of this sector within the S&P 500 Index, are projected to be down 16.3% year over year on 9.4% lower revenues.

Our Top Picks

We have narrowed down our search to five consumer staples stocks that are slated to report second-quarter earnings results within next seven trading days. Each of these stocks carries either a Zacks Rank #1 (Strong Buy) or 2 (Buy) and has a positive Earnings ESP. You can see the complete list of today’s Zacks #1 Rank stocks here.

Our research shows that for stocks with the combination of a Zacks Rank #3 or better and a positive Earnings ESP, the chance of an earnings beat is as high as 70%. These stocks are expected to soar after earnings release. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

The chart below shows the price performance of our five picks in the last quarter.

 

B&G Foods Inc. BGS manufactures, sells, and distributes a portfolio of shelf-stable and frozen foods, and household products in the United States, Canada and Puerto Rico. The company has an Earnings ESP of +1.56%.

B&G Foods has an expected earnings growth rate of 34.2% for the current year. The Zacks Consensus Estimate for the current year has improved by 2.3% over the last 30 days. It has a trailing four-quarter earnings surprise of 5.4%, on average. The company is set to release earnings results on Jul 30, after the closing bell.

Monster Beverage Corp. MNST develops, markets, sells, and distributes energy drink beverages and concentrates in the United States and internationally. It operates through three segments: Monster Energy Drinks, Strategic Brands and Other. The company has an Earnings ESP of +2.35%.

Monster Beverage has an expected earnings growth rate of 3% for the current year. The Zacks Consensus Estimate for the current year has improved by 0.5% over the last 30 days. It has a trailing four-quarter earnings surprise of 1.8%, on average. The company is set to release earnings results on Aug 4, after the closing bell.

Medifast Inc. MED manufactures and distributes weight loss, weight management, healthy living products, and other consumable health and nutritional products in the United States and the Asia-Pacific. The company has an Earnings ESP of +2.53%.

Medifast has an expected earnings growth rate of 19% for the current year. The Zacks Consensus Estimate for the current year has improved by 3.2% over the last 30 days. It has a trailing four-quarter earnings surprise of 5.3%, on average. The company is set to release earnings results on Aug 5, after the closing bell.

Nu Skin Enterprises Inc. NUS develops and distributes a wide range of premium cosmetics, beauty, personal care and wellness products. The company has an Earnings ESP of +6.35%.

The Zacks Consensus Estimate for Bonanza Nu Skin Enterprises' current-year earnings has improved 11.2% over the last 30 days. It has a trailing four-quarter earnings surprise of 13.5%, on average. The company is set to release earnings results on Aug 5, after the closing bell.

Flowers Foods Inc. FLO produces packaged bakery foods in the United States specializing in baked food products as well as produces a wide range of breads, buns, rolls, snack cakes and tortillas. The company has an Earnings ESP of +9.41%.

Flowers Foods has an expected earnings growth rate of 14.6% for the current year. The Zacks Consensus Estimate for the current year has improved by 0.9% over the last 30 days. It has a trailing four-quarter earnings surprise of 5.7%, on average. The company is set to release earnings results on Aug 6, after the closing bell.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

Today, See These 5 Potential Home Runs >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Nu Skin Enterprises, Inc. (NUS) : Free Stock Analysis Report
 
Monster Beverage Corporation (MNST) : Free Stock Analysis Report
 
BG Foods, Inc. (BGS) : Free Stock Analysis Report
 
Flowers Foods, Inc. (FLO) : Free Stock Analysis Report
 
MEDIFAST INC (MED) : Free Stock Analysis Report
 
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