Here at the Fool we love our seasons: football season, flip-flop season, and our favorite -- earnings season. It's that wonderful time of year when we get to celebrate those picks that outperformed and be humbled by those that didn't.
Each quarter we get to arm ourselves with a new set of expectations and estimates to better judge the economic landscape. We may not always nail our bets, but taking the initiative to learn about the expectations for a given sector will place investors well ahead of many of their peers. Woody Allen put it best when he observed, "Eighty percent of success is showing up."
With that in mind, here is what you can expect to see out of some of the biggest consumer foods companies this earnings season just by showing up and staying engaged.
|
Company |
Report Date |
Estimated Earnings |
Year-Ago Earnings |
% Change |
|---|---|---|---|---|
| Ralcorp (NYSE: RAH) | Feb. 6 | $1.44 | $1.26 | 14% |
| Coca-Cola (NYSE: KO) | Feb. 7 | $0.77 | $0.72 | 7% |
| PepsiCo (NYSE: PEP) | Feb. 9 | $1.13 | $1.05 | 8% |
| SodaStream (Nasdaq: SODA) | March 5 | $0.21 | $0.25 | (16%) |
| ConAgra Foods (NYSE: CAG) | March 22 | $0.51 | $0.50 | 2% |
Source: Earnings dates and estimates from Yahoo! Finance.
While there are some small changes here, there aren't any earnings that dramatically stand out one way or another, and that shouldn't be so surprising. Consumer goods companies tend to show remarkable resilience in tough times. During the financial crisis, companies in this space fell less than the broad market, though when the market sees large run-ups, this sector often gets left behind.
Drilling down
Just because a sector is known for stability doesn't mean there isn't anything to watch, though.
- Ralcorp is the first to report on this list, and it's expected to put up the largest growth of the bunch. Over the last 12 months, its stock price has risen an impressive 37.3%. The big story for it last year was the rejection of ConAgra's takeover offers. The company spurned four persistent offers. Watch it in coming months as it spins off Post Cereal, its most profitable division. The move, which would leave it focusing on its private-label business, has been met with support and opposition. ConAgra has announced it will be pursuing other acquisition targets.
- The earnings growth estimates for Coca-Cola are exactly as expected. A nice, respectable, long-term wealth-building 7%. It won't blow your socks off, but it's what the company has done for years and is expected to do for years to come. While its P/E is currently higher than rival PepsiCo, it was recently ranked as The World's Most Valuable Brand by Interbrand, and that certainly is worth paying a little bit more for. I don't expect any shockers out of this one, just a nice consistent and refreshing earnings season with no big surprises, much like its namesake beverage.
- PepsiCo had a great last quarter with snack volume up 31% in China and 26% in India. Beverage volume was up 16% in Turkey, and the company successfully passed on higher commodity prices to consumers. It is performance like this that has no doubt prompted the second-highest EPS growth estimates over last year among the group here. Be sure to watch its emerging market performance this quarter to see if it can keep the momentum up, and remember: When you're looking at beverage companies, it's all about volume growth.
- SodaStream is the only company expected to have an earnings retraction over last year. This time last year it was trading for roughly the same price but had a bit more momentum behind it. Its device has been called a fad and many are worried about the long-term potential of it. While this has yet to be seen, at least one company has some faith in it; food juggernaut Kraft has announced a strategic co-branding alliance with SodaStream to distribute Crystal Light concentrate for use in the soda devices. The deal is not seen as a big needle-mover for SodaStream, but nicely builds out its product portfolio.
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