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After turnaround, can Darden beat expectations?

While most companies are preparing for the start of first-quarter earnings, there are a few names scheduled to kick things off early. This week, we get earnings from notable companies like Darden Restaurants and Monsanto. These two have seen rampant movement, in both directions, ahead of their earnings call.

First up, Darden Restaurants is scheduled to report fiscal third-quarter earnings Tuesday, before the opening bell. Darden is responsible for popular dining chains Olive Garden and LongHorn Steakhouse. In the past three months, the casual dining operator has seen EPS expectations shift up 12 percent on a 2 percent increase in revenue.

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Analysts are now expecting earnings per share of $1.21 on $1.84 billion in revenue, according to the Estimize consensus. Compared to the year prior, earnings are projected to increase 19 percent, while sales are expected to grow 6 percent. Darden's affiliation with activist investors Starboard Value has been key to its turnaround. Because of its insight, Darden has beat on the bottom line in each of the past 5 quarters.

In a preliminary earnings call this past week, Darden indicated EPS would fall in the range of $1.18-1.21, right in line with the crowdsourced consensus. Besides the influence from Starboard, Darden has successfully unlocked value after spinning off a real estate investment trust. Moreover, improvements in its key brands and aggressive cost cutting initiatives are expected to save Darden $100 million over the next 2 years.

On the other hand, Monsanto has fared worse. Expectations have plunged over the past three months and are now 16 percent lower on the bottom line and 7 percent fewer on the top. Chemically and genetically modified products continue to be phased out in favor of organic products, leaving Monsanto in a predicament.

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The crowd of professionals and nonprofessionals tracking Monsanto, are calling for earnings per share of $2.47 on $4.78 billion in revenue. On a year over year basis, this predicts as a 11 percent decline in earnings while sales are expected to fall 7 percent.

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In the short term, Monsanto faces challenging agriculture trends, namely weak commodity prices and unfavorable glyphosate conditions. Volatile seed prices have put pressure on pivotal corn and soybean production. Meanwhile, ongoing price pressure on glyphosate (the active ingredient in Roundup) and volatility in key markets have caused revenue and margins to slip. Like other multinationals, Monsanto has been impacted by a strong U.S. dollar and a weak global economy, particularly in Latin America. Unfortunately, these conditions are expected to last through the end of fiscal 2017.

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While the start of earnings season is still a few weeks away, Darden and Monsanto are expected to kick things off on a different tone. Heavy revisions activity over the past three months potentially sets the tone for other consumer discretionary and chemical names this season.

How do you think these names will report this week? Be included in the Estimize consensus by contributing your estimates here!