Soft Drink Stocks' Q1 Earnings Due On Apr 26: PEP, DPS, KOF

The first-quarter earnings season has so far wooed investors with accelerating growth and is on track to mark the best performance in almost three years. Per our latest Earnings Preview, earnings for the S&P 500 companies are expected to grow 9.1% from the year-ago period and revenues 6%. In the fourth quarter, earnings for the S&P 500 companies increased 7.4%, while revenues rose 4.8%.

Although Consumer Staples stocks have performed better than expected so far, the year-over-year results have not been encouraging. As of Apr 21, 15.6% of the S&P 500 companies in this sector have released their quarterly numbers. Of these, 80% companies posted an earnings beat (declining 0.7% year over year), while 20% surpassed revenue estimates (decreasing 6.9% year over year). That said, total earnings in this sector are expected to grow 2.4% while revenues are anticipated to be up 4%.

Coming to the Beverage-Soft Drinks industry within the consumer staples sector, the industry has been affected by changing consumer preferences. Consumers are particularly vigilant about the use of artificial sweeteners, high sugar content and related obesity concerns. Also, possible new taxes levied on sugar-sweetened beverages and growing regulatory pressure are affecting Carbonated Soft Drink ("CSD") sales. The challenges in the CSD category have been felt by all major soft drink makers, leading to lower volumes and weak sales.

Given this backdrop, let’s try to determine how these players – PepsiCo, Inc. (NYSE:PEP) , Dr Pepper Snapple Group, Inc (NYSE:DPS) and Coca Cola Femsa S.A.B. De C.V. (NYSE:KOF) – are placed ahead of their first-quarter 2017 earnings release on Apr 26. Another important stock in the sector, The Hershey Company (NYSE:HSY) , is also slated to release its quarterly figures on this date.

PepsiCo, one of the leading global food and beverage companies, posted a positive 3.5% earnings surprise in the last quarter. Also, the company surpassed the Zacks Consensus Estimate in all of the last four quarters, with an average beat of 6.22%.

Our proven model shows that PepsiCo is likely to beat earnings because it has the perfect combination of an Earnings ESP of +1.10% (Most Accurate estimate is pegged at 92 cents and Zacks Consensus Estimate at 91 cents) and a Zacks Rank #3 (Hold).

As per our model, a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 to beat earnings. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Pepsico, Inc. Price and EPS Surprise

For the first quarter, the Zacks Consensus Estimate for earnings is pegged at 91 cents, reflecting a 1.8% year-over-year increase. Meanwhile, our estimate for revenues is pegged at $11.95 billion, implying a 0.8% increase.

Headquartered in Plano, TX, Dr Pepper Snapple manufactures and distributes a varied product range of flavored (non-cola) carbonated soft drinks and non-carbonated beverages.

Our model hints at a beat for Dr Pepper Snapple as it has an Earnings ESP of +1.04% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Dr Pepper Snapple Group, Inc Price and EPS Surprise

Last quarter, the company posted a negative surprise of 1.9%. However, the company surpassed estimates in three of the trailing four quarters, resulting in an average positive surprise of 4.47%.

For the first quarter, the Zacks Consensus Estimate for earnings is pegged at 96 cents, reflecting a 2.5% year-over-year rise, while the consensus for revenues is at $1.56 billion, implying 4.8% year-over-year growth (read more: Dr Pepper Snapple (DPS) Q1 Earnings: A Beat in the Cards? )

Coca-Cola FEMSA, S.A.B. de C.V. is the largest franchise bottler in the world by sales volume.

Last quarter, the company posted a positive surprise of 8.9%. However, the company surpassed estimates in only two of the trailing four quarters, resulting in an average miss of 6.9%.

Our proven model does not conclusively show that Coca-Cola FEMSA is likely to beat earnings this quarter as it has an Earnings ESP of 0.00% and a Zacks Rank #2.

Coca Cola Femsa S.A.B. de C.V. Price and EPS Surprise

For the first quarter, the Zacks Consensus Estimate for earnings is pegged at 61 cents, reflecting a 4.7% year-over-year decline, while the consensus for revenues is at $2.44 billion, implying 18.9% year-over-year growth.

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