Whole Foods Market, Inc. WFM is scheduled to release second-quarter fiscal 2015 results on May 6. The big question facing investors is whether this retailer of natural and organic foods will be able to continue with its positive earnings surprise streak in the quarter to be reported.
The company’s past performance reveals that it has outperformed the Zacks Consensus Estimate in the trailing four quarters by an average of 2.4%. Let’s see how things are shaping up for this announcement.
Factors Influencing this Quarter
Whole Foods is gaining market share on account of its national marketing and branding campaigns, and product launches. We believe that effective inventory management and improved store-level performance are helping the company to generate improved sales. However, increasing competition and aggressive pricing may weigh on the company’s quarterly performance as more and more companies are entering as well as expanding their presence in the Organic & Natural food business.
Earnings Whispers
Our proven model does not conclusively show that Whole 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 #1, 2 or 3 for this to happen. This is not the case here, as you will see below:
Zacks ESP: Whole Foods currently has an Earnings ESP of 0.00%. This is because the Most Accurate estimate and the Zacks Consensus Estimate both stand at 42 cents.
Zacks Rank: Whole Foods carries a Zacks Rank #2 (Buy). Though a Zacks Rank #2 increases the predictive power of ESP, the company’s ESP of 0.00% makes surprise prediction difficult.
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 that Warrant a Look
Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Jack in the Box Inc. JACK has an Earnings ESP of +1.52% and a Zacks Rank #3 (Hold).
Kate Spade & Company KATE has an Earnings ESP of +150.0% and a Zacks Rank #3.
Treehouse Foods, Inc. THS has an Earnings ESP of +1.72% and a Zacks Rank #3.
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