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Is Clorox (CLX) Likely to Report a Beat in Q2 Earnings?

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The Clorox Company CLX is slated to report second-quarter fiscal 2021 results on Feb 4, before market open. This leading consumer products company is likely to have witnessed revenue and earnings growth in the to-be-reported quarter. The Zacks Consensus Estimate for the company’s fiscal second-quarter earnings is pegged at $1.69 per share, suggesting 15.8% growth from the year-ago quarter’s reported figure. The consensus mark has moved up by 1.2% in the past seven days.

For fiscal second-quarter revenues, the consensus mark is pegged at $1.76 billion, suggesting 21.8% growth from the prior-year quarter’s reported figure.

In the last reported quarter, this Oakland, CA-based manufacturer and marketer of consumer products delivered an earnings surprise of 37.6%. Moreover, it delivered an earnings surprise of 19.9%, on average, over the trailing four quarters.

The Clorox Company Price and EPS Surprise

The Clorox Company Price and EPS Surprise
The Clorox Company Price and EPS Surprise

The Clorox Company price-eps-surprise | The Clorox Company Quote

Factors to Note

Clorox has been gaining from increased demand for disinfecting and cleaning products since the onset of the COVID-19 pandemic, resulting in broad-based growth across all its segments. In the last reported quarter’s earnings call, management predicted continued gains from persistent strong demand globally for cleaning and disinfecting products, aggressive investments in its global portfolio, and minimal disruptions in its extended supply chain and other operations.

Management predicted sales growth for the rest of the year, with double-digit sales growth anticipated in the fiscal second quarter. Further, gains from its cost-containment efforts are likely to have aided margins and the bottom line. Also, progress on its IGNITE strategy and robust product portfolio bode well.

The company has been on track with its cost-saving and productivity initiatives. Backed by the IGNITE strategy, Clorox aims at higher cost savings annually by emphasizing more on technology and integrated design. Its cost-based pricing strategy has enabled it to address the inflationary environment, leading to gross margin gains in the past few quarters. These cost-saving and pricing actions are likely to have aided continued gross margin growth in the to-be-reported quarter.

However, Clorox has been reeling under elevated costs for manufacturing and logistics as well as higher incentive compensation. These escalated costs have been partly hurting the bottom line for a while. Moreover, increased advertising and sales promotion investments have been headwinds.

Zacks Model

Our proven model conclusively predicts an earnings beat for Clorox this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Clorox has a Zacks Rank #3 and an Earnings ESP of +0.30%.

Other Stocks With a Favorable Combination

Here are some other companies you may want to consider, as our model shows that these also have the right combination of elements to post an earnings beat:

Newell Brands Inc. NWL presently has an Earnings ESP of +2.70% and it sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

e.l.f. Beauty Inc. ELF has an Earnings ESP of +3.52% and a Zacks Rank #2 at present.

PepsiCo, Inc. PEP currently has an Earnings ESP of +2.44% and a Zacks Rank #3.

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