What's In The Cards For B&G Foods (BGS) In Q2 Earnings?

B&G Foods, Inc. (NYSE:BGS) is set to report second-quarter 2016 results on Jul 28, after the markets closes.

Last quarter, this New Jersey-based shelf-stable and frozen food company posted a positive surprise of 27.45%. Moreover, the company has surpassed estimates in three out of the past four quarters, resulting in an average positive surprise of 5.67%.

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

Factors to Consider

B&G Foods raised its 2016 outlook for net sales, adjusted EBITDA and earnings per share at the first quarter conference call backed by the acquisition of Green Giant brand from General Mills, Inc. (NYSE:GIS) in Nov 2015. The Green Giant acquisition resulted in better-than-expected profitability in the first quarter of 2016, which led management to raise its expectation. The integration of Green Giant is in process and on schedule. The company has a huge pipeline under the brand. These positives should benefit sales and profits in the soon-to-be reported quarter as well.

On the other hand, net sales of the comparable base business were hurt by softness in volume and unfavorable currency translations in the past four quarters. This trend may not improve in the second quarter of 2016. However, the company’s strong pricing trend has been offering top-line support in the past few quarters. This is likely to continue in the soon-to-be reported quarter as well.

Earnings Whisper?

Our proven model does not conclusively show that B&G 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 of #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: B&G Foods’ Earnings ESP is 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 46 cents.

Zacks Rank: B&G Foods has a Zacks Rank #3. Though the company’s Zacks Rank #3 increases the predictive power of ESP, we need to have a positive ESP to be confident about an earnings surprise.

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

Stocks to Consider

Here are some companies in the food sector that can be considered as our model shows that they have the right combination of elements to post an earnings beat this quarter:

Post Holdings Inc. (NYSE:POST) has an Earnings ESP of +12.77% and a Zacks Rank #1

Tyson Foods, Inc. (NYSE:TSN) has an Earnings ESP of +0.93% and a Zacks Rank #3

The Kraft Heinz Company (NASDAQ:KHC) has an Earnings ESP of +4.23% and a Zacks Rank #3