U.S. Markets open in 5 hrs 57 mins

4 Winning Consumer Staples Stock Bets for This Earnings Season

Rajani Lohia

Strong results from PepsiCo PEP early this month marked a stellar start to the September quarter reporting cycle for the Consumer Staples sector. Upcoming results from arch-rival Coca-Cola KO and another industry player Procter & Gamble PG should set the tone for the sector this earnings season.

Companies in the sector are likely to have benefited from efforts to boost productivity, product launches and enhanced focus on investments and innovation. Further, sector players’ results in this reporting cycle should reflect the effects of improved pricing, packaging and marketing initiatives, and restructuring actions — including acquisitions and divestitures. Notable progress in cost-containment and productivity enhancement is likely to have worked in favor as well. These factors have been boosting revenues for these companies for quite a while now and this reporting cycle is unlikely to be an exception.

Players in this space, however, grapple with escalating raw material and transportation costs. These along with the damaging US-China trade war, uncertain global markets, higher operating expenses due to advertising investments and unfavorable currency rates should show on current-quarter margins and profitability of the companies. Further, heightened competition, price wars and aggressive promotional activities are likely to have impacted margins.

Nonetheless, this consumer-driven sector sees inelastic demand as it covers industries like beverages, food retailers, food products, household products, personal products and tobacco. Moreover, steady income growth and a strong labor market are likely to reflect in the sector’s revenue results for the quarter under review.

Per the latest Earnings Trends, the Consumer Staples sector’s current-quarter revenues are expected to increase 5.2% while earnings are likely to decline 4.5%.

4 Consumer Staples Stocks to Win Big This Earnings Season

With the help of our Zacks Stock Screener, we have identified a few Consumer Staples stocks poised to beat the Zacks Consensus Estimate this earnings season. Our research shows that for stocks with the combination of a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP, the chance of a positive earnings surprise is as high as 70%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

US Foods Holding Corp. USFD markets and distributes fresh, frozen, and dry food and non-food products to foodservice customers in the United States. The company, which is expected to report earnings on Nov 5, has an average positive earnings surprise of 2.1% for the trailing four quarters. The Zacks Consensus Estimate for current-quarter earnings is pegged at 60 cents, suggesting growth of 8.6% from the year-ago reported figure. US Foods Holding has an Earnings ESP of +3.33% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

US Foods Holding Corp. Price and EPS Surprise

US Foods Holding Corp. Price and EPS Surprise

US Foods Holding Corp. price-eps-surprise | US Foods Holding Corp. Quote

Estee Lauder Companies Inc. EL, which has an Earnings ESP of +0.63% and a Zacks Rank #2, is also a solid bet. This leading manufacturer and marketer of skin care, makeup, fragrance and hair care products is expected to report earnings on Oct 31. The company has an average positive earnings surprise of 17.1% for the trailing four quarters. The Zacks Consensus Estimate for its current-quarter earnings is pegged at $1.60, suggesting growth of 13.3% from the year-ago reported figure.

The Estee Lauder Companies Inc. Price and EPS Surprise

The Estee Lauder Companies Inc. Price and EPS Surprise

The Estee Lauder Companies Inc. price-eps-surprise | The Estee Lauder Companies Inc. Quote

Church & Dwight Co., Inc. CHD provides a broad range of household, personal care and specialty products. The company operates in six countries and exports to over 90 other countries. Currently, it has an Earnings ESP of +1.64% and a Zacks Rank #2. The Zacks Consensus Estimate for its current-quarter earnings is pegged at 61 cents, suggesting year-over-year growth of 5.2%. The company has an average positive earnings surprise of 5.3% for the last four quarters. It is slated to report earnings on Oct 31.

Church & Dwight Co., Inc. Price and EPS Surprise

Church & Dwight Co., Inc. Price and EPS Surprise

Church & Dwight Co., Inc. price-eps-surprise | Church & Dwight Co., Inc. Quote

Kimberly-Clark Corporation KMB, engaged in the manufacturing and marketing of a wide range of consumer products around the world, has an Earnings ESP of +1.66% and a Zacks Rank #3. The Zacks Consensus Estimate for its current-quarter earnings is pegged at $1.81, suggesting year-over-year growth of nearly 6%. The company has an average positive earnings surprise of 2.3% for the last four quarters. It is scheduled to report earnings on Oct 22.

Kimberly-Clark Corporation Price and EPS Surprise

Kimberly-Clark Corporation Price and EPS Surprise

Kimberly-Clark Corporation price-eps-surprise | Kimberly-Clark Corporation Quote

Free: Zacks’ Single Best Stock Set to Double

Today you are invited to download our just-released Special Report that reveals 5 stocks with the most potential to gain +100% or more in 2020. From those 5, Zacks Director of Research, Sheraz Mian hand-picks one to have the most explosive upside of all.

This pioneering tech ticker had soared to all-time highs and then subsided to a price that is irresistible. Now a pending acquisition could super-charge the company’s drive past competitors in the development of true Artificial Intelligence. The earlier you get in to this stock, the greater your potential gain.

Download Free Report Now >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Kimberly-Clark Corporation (KMB) : Free Stock Analysis Report
 
Pepsico, Inc. (PEP) : Free Stock Analysis Report
 
Coca-Cola Company (The) (KO) : Free Stock Analysis Report
 
The Estee Lauder Companies Inc. (EL) : Free Stock Analysis Report
 
US Foods Holding Corp. (USFD) : Free Stock Analysis Report
 
Church & Dwight Co., Inc. (CHD) : Free Stock Analysis Report
 
Procter & Gamble Company (The) (PG) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research