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Heinz Co. (NYSE:HNZ) is scheduled to report its third-quarter 2011 financial results on March 3, 2011. Currently, the Zacks Consensus Estimate is 80 cents per share and revenue is expected to be $2,700 million for the reported quarter.

Third-Quarter 2011, a Synopsis

Heinz Co., which faces stiff competition from Campbell Soup Co. (NYSE:CPB) and Con Agra Foods Inc. (NYSE:CAG), reported better-than-expected second-quarter 2011 results and posted robust earnings of 78 cents, beating the Zacks Consensus Estimate of 76 cents. The earnings per share reported by the retailing giant were 2.61% higher than the prior-year quarter. Profits were driven by strong performances in the emerging markets and in global ketchup sales.

During the quarter, total sales inched down 1.2% to $2.61 billion from $2.64 billion in the prior-year quarter. The decline was primarily attributable to a 2.3% impact from unfavorable currency translation. This was partially offset by 0.3% in volume growth, and a 0.6% benefit from increased pricing. Organic sales for the quarter grew by 0.9%. However, total sales fell short of the Zacks Consensus Estimate of $2.66 billion.

Management Guided

At its last earnings conference call, the company reaffirmed its previously announced outlook for sales, operating income and EPS for fiscal 2011. Management estimated earnings growth to be in the range of 7% to 10% backed by operating income growth of same range and sales growth of 3% to 4%.

Third-Quarter 2011 Zacks Consensus

Analysts covered by Zacks expect Heinz to post third-quarter 2011 earnings of 80 cents a share. The current Zacks Consensus Estimate represents a year-over-year decline of 3.61% and ranges from a low of $0.76 to a high of $0.84.

The current estimate inched down by 1 cent over the last 30 days as 1 analyst revised his estimate.

Mixed Earnings Surprise History

With respect to earnings surprises, Wal-Mart has outpaced the Zacks Consensus Estimate by an average 2.69% over the last four quarters, ranging from 0.00% to 3.75%.

Our Recommendation

Heinz’s growth in domestic businesses, strengthening international operations, focused resource allocation and management’s efforts on balance sheet management inspire optimism in the company’s outlook. Management is also strongly focused on the top 15 brands, which hold strong market positions and represent nearly 70% of total sales.

Moreover, the company’s operations in the international markets have been instrumental to growth. Heinz generates nearly 60% of sales from markets outside the U.S. The Asia-Pacific segment has been a source of major strength.

Volume growth has been particularly strong in China, and New Zealand (Wattie’s), with the two leveraging new product launches for growth. The focus on the developing markets is also paying off in India, China, Indonesia, Poland and Russia with strong volume and sales growth.

Heinz currently holds a Zacks #2 Rank. On a long-term basis, we maintain a Neutral rating on the stock, but hold a short-term Buy rating.

Source: Heinz: Earnings Preview