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Will SodaStream's (SODA) Earnings Disappoint Again in Q4? - Analyst Blog

Zacks Equity Research
Updated

SodaStream International Ltd. (SODA) is set to report fourth-quarter and full-year 2014 results on Feb 25, before the market opens. Last quarter, the Israel-based manufacturer of household soda delivered a negative earnings surprise of 11.76%.

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

Factors to Consider

SodaStream has been reporting soft sales in the U.S. over the past few quarters due to low demand for its products — soda machines and flavored syrups.

Management claims that though the company has quite a number of loyal customers, it has failed to gain new customers for its home carbonation systems. SodaStream’s products are primarily sold at major retail stores like Kohl’s, Corp. (KSS), Macy’s and Bed Bath & Beyond.

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The carbonated soft drink (CSD) market is going through a tough time in the U.S. as consumers are shifting away from traditional soda toward more natural, less caloric and water-based beverages. In keeping with the changing trend, SodaStream has already shifted toward health and wellness brands and is making significant changes in its growth strategies as well. However, efforts to reinvigorate sales have failed miserably.

Notably, at the third-quarter 2014 conference call in October, management reduced its full-year revenue and earnings outlook, following the sluggish results and a rather pessimistic fourth-quarter outlook.

SodaStream’s share price dipped around 5% year-to-date in 2015. In fact, in 2014, its share price nosedived 58% following poor sales performance.

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, 2 or 3 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 20 cents.

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

Stocks to Consider

Some stocks in the broader consumer staples sector that have both a positive Earnings ESP and a favorable Zacks Rank are:

The New York Times Company (NYT), with an Earnings ESP of +14.29% and a Zacks Rank #3 (Hold).

United Natural Foods, Inc. (UNFI), with an Earnings ESP of +4.55% and a Zacks Rank #3.


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NY TIMES A (NYT): Free Stock Analysis Report
 
KOHLS CORP (KSS): Free Stock Analysis Report
 
SODASTREAM INTL (SODA): Free Stock Analysis Report
 
UTD NATURAL FDS (UNFI): Free Stock Analysis Report
 
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Zacks Investment Research