Imperial Sugar Earnings Preview: A Positive Surprise Coming? - Invesco DB Commodity Index Tracking Fund (ARCA:DBC), WisdomTree U.S. SmallCap Dividend Fund (ARCA:DES)

Imperial Sugar

IPSU

is scheduled to report its third-quarter fiscal 2011 results Friday morning, August 4. Speculation has been that positive surprises may be in store from this quarterly report and the next as the uptrend in refined sugar prices continues and production at two new refineries kicks into gear. Analysts are looking for the company to report earnings of $0.52 per share, which compares to a net loss of $0.48 in the same period of last year. That EPS estimate is also up from $0.38 per share 60 days ago. This would be the second profitable quarter in a row; earnings results have been better than expected in three of the past four quarters. But the analysts' forecast also calls for the company to post revenues of $222.2 million, a decrease of 14.9% from a year ago. Some are looking for a positive surprise here too, with revenues perhaps as much as $235 million. Looking ahead to the next quarter, analysts so far anticipate sequential growth of both per-share earnings and revenues.

The Company

Sugar Land, Texas-based Imperial Sugar processes and markets refined sugar and related products in the United States. Its brands include Dixie Crystals, Holly, and Imperial. The company sells its products to retailers, distributors and industrial food manufacturers. The company was founded in 1843. During the three months that ended in June, the company declined to exercise its option to acquire the remaining 50% of Wholesome Sweeteners, a joint venture partner and a leading U.S. organic and natural sweeter company.

Performance

The company has a dividend yield of 0.3% and a forward P/E ratio estimate of 11.9. The company reports no long-term debt, and short interest in the stock is about 6.6% of the float, down from a peak in June. The consensus recommendation of analysts is to buy the stock; they have a mean price target of $26.33 per share. At today's opening price of $22.69, shares were about 70% higher than at the beginning of the year. The stock remains above both the 50-day and 200-day moving averages. In the past six months, the stock has outperformed its industry average and the broader markets.

Action Items:Bullish:

Traders interested in exchange traded funds invested in Imperial Sugar might want to consider the following trades:

iShares Russell 2000 Index Fund IWM: up more than 14% in the past year
PowerShares FTSE RAFI US 1500 Small-Mid Portfolio PRFZ: up more than 14% in the past year
WisdomTree SmallCap Dividend Fund DES: up more than 5% in the past year

Bearish:

Traders who prefer other commodities ETFs might want to consider these positions:

PowerShares DB Commodity Index Tracking Fund DBC: up almost 25% in the past year
ELEMENTS S&P Commodity Trends Indicator — Total Return ETN LSC: up more than 17% in the past year
GS Connect S&P GSCI Enhanced Commodity Total Return Strategy Index ETN GSC: up almost 16% in the past year

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