What's In Store For SodaStream (SODA) In Q2 Earnings?

SodaStream International Ltd. (NASDAQ:SODA) is slated to report second-quarter 2016 results on Aug 2, before the opening bell.

Last quarter, the Israel-based manufacturer of household soda makers delivered a positive earnings surprise of 93.33%.

The company delivered positive earnings surprises in two of the past four quarters with an average surprise of 20.12%.

Let’s see how things are shaping up prior to this announcement.

Factors to Consider

SodaStream makes soda/sparkling water machines and flavored syrups which are primarily sold at major retail stores like Kohl’s Corp. (NYSE:KSS) , Macy’s and Bed Bath & Beyond (NASDAQ:BBBY).

After reporting weak sales results in few past quarters due to low demand for its products, SodaStream reported strong sales and margins in the first-quarter 2016. Backed by the strong first-quarter performance, the company raised its full-year sales and profit guidance.

The growth plan of the company, which focuses on transitioning from soda to a healthy water-based brand along with building a more efficient infrastructure, gained traction in the first quarter.

As a part of the plan, the company rolled out a range of natural water-enhanced flavors in the U.S. and some international markets last year. The company also introduced an automated Sparkling Water Maker, named Power, supporting the launch with an integrated marketing campaign, including TV, PR and digital, as well as improved retail execution. The company’s marketing efforts fuelled demand for its products in markets like France and the Nordics in the first quarter after several quarters of decline.

Also, the company has transformed its manufacturing base and operating structure — including consolidating production under the new Lehavim facility in Southern Israel and closing other legacy facilities — to improve efficiency.

The company achieved better sales and profits in the first quarter on the back of new flavors on the shelf and enhanced efficiency and operating performance from the fully-functional Lehavim production facility. We expect the positive trend to continue in the second quarter.

Earnings Whispers

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

Zacks ESP: The Earnings ESP is 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate stand at 19 cents.

Zacks Rank: SodaStream’sZacks Rank #3 is favorable but a 0.00% ESP makes surprise prediction difficult.

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

Stocks to Consider

A couple of stocks in the broader consumer products sector that have both a positive Earnings ESP and a favorable Zacks Rank are:

Spectrum Brands Holdings, Inc. (NYSE:SPB) , with an Earnings ESP of +2.96% and a Zacks Rank #3.

Vista Outdoor Inc. (NYSE:VSTO) , with an Earnings ESP of +2.94% and a Zacks Rank #3.