Supermarket Stocks To Report Earnings On May 10: WFM, JRONY

Over halfway through the first-quarter earnings season, reports for 412 S&P 500 companies are already out as of May 5, per the Earnings Preview. According to this report, earnings for the total S&P 500 companies are expected to improve 12.7% from the year-ago period with total revenue rising by 6.2%. In fact, this season has been witnessing quite impressive outcomes so far in comparison with the past years. Notably, a huge number of companies have posted positive surprises, mainly on the revenues front.

Per the report, out of the 412 S&P 500 companies that have come up with their quarterly numbers, approximately 73.3% posted positive earnings surprises, while 67.7% outperformed the top-line expectations. Total earnings for these index members were up 14.2% from the year-ago quarter, while revenues also increased 7.3%.

We note that the performance of the index is not restricted to a single sector, and of the 16 Zacks sectors, three are expected to witness an earnings decline. Of these, Autos and Transportation are likely to be the major drags.

Supermarket Stocks form part of the Retail/Wholesale sector. Per the report, about 42.9% of the S&P 500 companies in the Retail/Wholesale sector have reported their results, wherein 61.1% companies posted an earnings beat, while 66.7% surpassed revenue estimates. Earnings rose 2.9% year over year and revenues increased 5.3%. However, the earnings for the sector are expected to decline 2.2%, but revenues are projected to grow 3.3%. In fact, the Retail/Wholesale sector currently holds the bottom-most position among the 16 Zacks classified sectors.

So, let’s take a look at a couple of Supermarket stocks that are queued up for earnings releases on May 10.

To start with Whole Foods Market, Inc. (NASDAQ:WFM) , we are unsure whether this leading natural and organic foods retailer will be able to post a positive earnings surprise when it reports second-quarter fiscal 2017 results. This 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. You may uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Whole Foods has an Earnings ESP of +2.70%. This is because the Most Accurate estimate of 38 cents is pegged higher than the Zacks Consensus Estimate of 37 cents. However, the company carries a Zacks Rank #4 (Sell).

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

The company has been grappling with primary headwinds such as, stiff competition, food price deflation, an aggressive promotional environment and waning store traffic. Analysts believe that the industry-wide weakness is hurting the margins of supermarket chains. Of late, grocery chains have been going through a rough patch. Further, comparable-store sales fell for the sixth straight quarter now. Nevertheless, Whole Foods has been revamping pricing strategy and concentrating on value offerings in view of heightened competition as more companies are entering and expanding their presence in the Organic & Natural food business. Also, estimates have been stable lately ahead of the company’s earnings release. (Read more: Things You Need to Know Before Whole Foods' Q2 Earnings)

Lastly, let’s see what’s in store for Jeronimo Martins, SGPS, S.A. (OTC:JRONY) , which is engaged in the distribution and production of food items and fast moving consumer goods through its retail and wholesale operations in Portugal and Poland.

The company has an Earnings ESP of 0.00% and carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here. Though a favorable Zacks Rank increases the predictive power of ESP, but ESP of 0.00% makes surprise prediction difficult.

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