SodaStream International Ltd. (SODA - Snapshot Report) is set to report first-quarter 2016 results on May 10, before the market opens. Last quarter, the Israel-based manufacturer of household soda makers delivered a positive earnings surprise of 41.18%.

The company delivered positive earnings surprises in two of the past four quarters with an average surprise of 138.45%.

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

Factors to Consider

The company’s sales figures have been weak in the U.S. over the past few quarters due to low demand for its products like soda/sparkling water machines and flavored syrups. SodaStream’s products are primarily sold at major retail stores like Kohl’s, Corp. (KSS - Analyst Report), Macy’s and Bed Bath & Beyond.

The U.S. carbonated soft drink (CSD) market is suffering as consumers are shifting away from traditional soda toward more natural, water-based beverages with fewer calories. Keeping in line with this, SodaStream is pursuing a global restructuring and growth plan. The company is repositioning itself as a water-based brand under a health and wellness plan and making significant changes in its growth strategies to boost business.

As part of the aforesaid plan, the company rolled out a range of natural water-enhanced flavors in the U.S. and some international markets as well as an automated sparkling water maker – Power – in the last year’s second half. The company is also supporting the launches with integrated marketing campaigns as well as improved retail execution.

Also, the company is working on the transformation of its manufacturing base and operating structure – which includes consolidating production under the new Lehavim facility in Southern Israel and closing other legacy facilities – to enhance efficiency.

The company achieved better sales trends in the fourth quarter of 2015 supported by new flavors on the shelf and the fully-functional Lehavim production facility.

We believe that the company will be able to maintain the improved sales trends in the first quarter of 2016. However, currency headwinds might limit sales growth as many foreign currencies such as Euro, Australian dollar and Swedish krona continue to weaken against the U.S. dollar. Also, advertising costs are expected to go up as the company works on driving consumer demand for the new products.

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 (Strong Buy), 2 (Buy) or 3 (Hold) 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 14 cents.

Zacks Rank: SodaStream’s Zacks Rank #3 is favorable but a 0.00% ESP makes surprise prediction difficult.

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

Stocks to Consider

A couple of stocks in the broader consumer products sector that have both a positive Earnings ESP and a favorable Zacks Rank are:

Prestige Brands Holdings, Inc. (PBH - Snapshot Report) with an Earnings ESP of +4.08% and a Zacks Rank #2.

Electronic Arts Inc. (EA - Analyst Report) with an Earnings ESP of +6.67% and a Zacks Rank #3.