Dean Foods (DF) Q3 Earnings: What's In Store This Quarter?

Dean Foods Company (NYSE:DF) is slated to report third-quarter 2016 results on Nov 7. Last quarter, the company had delivered a negative earnings surprise of 2.6%.

However, the company has outperformed the Zacks Consensus Estimate in the preceding three quarters, with an average beat of 10.4% over the past four quarters. Let’s see how things are shaping up for this announcement.

Factors Influencing this Quarter

Dean Foods’ focus on its key strategic measures, concentrated on three controllable factors – price realization, cost productivity and creating a balance between pricing and volumes, is likely to aid in delivering appropriate returns even in the face of industry headwinds. Following the mixed second-quarter results, management remains content with its progress, given its solid operational and financial results that strengthened Dean Foods’ balance sheet even further.

Taking cue from this strength, focus on cost management and constant brand building initiatives, the company remains on track to consolidate its position in the dairy industry and boost shareholder value.

The company expects volumes to dip in the low single digits in third-quarter 2016, however, it represents an improvement from current trends. Additionally, the company anticipates the average Class I Mover for third-quarter 2016 to come in at $15 per hundred-weight, representing an 11% increase sequentially but an 8% decline year over year. Considering these factors, management envisions third-quarter 2016 adjusted earnings to range from 32–40 cents a share, while GAAP earnings are estimated to be in the range of 28–36 cents. That said, we would wait and see what is in store for this dairy products producer in the ensuing quarterly release.

Earnings Whispers

Our proven model does not conclusively show that Dean Foods is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below:

Zacks ESP: Earnings ESP for Dean Foods is currently stands at 0.00%. This is because the Most Accurate estimate and the Zacks Consensus Estimate are both pegged at 37 cents. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.

Zacks Rank: Dean Foods currently has a Zacks Rank #3 (Hold). Although the company has a favorable Zacks Rank, its 0.00% makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks Poised to Beat Earnings Estimates

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:

Michael Kors Holdings Limited (NYSE:KORS) , scheduled to release earnings on Nov 10, has an Earnings ESP of +4.55% and a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Hibbett Sports Inc. (NASDAQ:HIBB) , expected to report earnings on Nov 18, currently has an Earnings ESP of +4.00% and a Zacks Rank #2.

American Eagle Outfitters Inc. (NYSE:AEO) , expected to report earnings on Dec 7, currently has an Earnings ESP of +2.44% and a Zacks Rank #2.

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