U.S. Markets open in 8 hrs 28 mins

Consumer Staples Earnings Slated for Oct 31: EL, CLX, CHD & AVP

Rajani Lohia

The quarterly reports of companies in the Consumer Staples sector are likely to reflect the benefits from improved pricing, packaging and marketing initiatives, and restructuring actions — including acquisitions and divestitures. Moreover, efforts to boost productivity, strengthen e-commerce business and focus on product launches, innovation and differentiation must have worked in favor. Cumulatively these factors have been driving revenues of these companies, and this reporting cycle is unlikely to be an exception.

However, headwinds related to escalating raw material prices and higher transportation expenses are likely to have increased cost burden. These along with the impact of U.S.-China trade war tussle, uncertainty in global markets, higher operating expenses due to advertising investments, and unfavorable currency rates likely to show on current-quarter profitability. Further, heightened competition, price wars and aggressive promotional activities remain deterrents.

Nonetheless, cost-saving endeavors undertaken by companies are likely to have cushioned margins to an extent. Moreover, a steady consumer income growth and strong labor market are likely to have worked in favor of the sector.

Per the latest Zacks Earnings Outlook, the Consumer Staples sector’s current-quarter revenues are expected to increase 5% while earnings are likely to decline 1.4%.

That said, we note that some players in the Consumer Staples sector — currently ranked among the bottom 32% out of the 16 Zacks sectors — are slated to release quarterly results on Oct 31. Let’s take a look at what is in store for some of these companies.

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 chances of a positive earnings surprise is high. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Church & Dwight Co., Inc’s CHD top line in third-quarter 2019 is likely to have gained from continued category growth focus on product innovations, portfolio expansion and strength in international business. In the last earnings call, management had projected sales growth of 6% on a reported basis and 3% on an organic basis for third-quarter 2019. Additionally, the company is on track with efficient pricing and productivsity enhancement initiatives, which are likely to have cushioned gross margin despite rising commodity and input costs.

The Zacks Consensus Estimate for its earnings has been unchanged in the past 30 days at 61 cents, which suggests an increase of 5.2% from the year-ago quarter’s reported figure. The consensus mark for revenues is pegged at $1,103 million, which indicates growth of 6.3% from the prior-year quarter’s reported number. (Read More: Factors to Know Ahead of Church & Dwight’s Q3 Earnings)

Our proven model predicts an earnings beat for Church & Dwight this time around. Church & Dwight has an Earnings ESP of +0.22% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

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

The Clorox Company CLX has been witnessing operational headwinds in Charcoal, and Bags and Wraps businesses, which have been hurting its top line, a trend that is likely to have continued in first-quarter fiscal 2020. Further, higher SG&A expenses and adverse currency rates are expected to have affected its quarterly performance.

The Zacks Consensus Estimate for its earnings has moved south in the past 30 days to $1.54, which suggests a decline of 4.9% from the year-ago quarter’s reported figure. The consensus mark for revenues is pegged at $1,512 million, which indicates a decline of 3.3% from the figure reported in the year-ago quarter.

Our proven model does not conclusively predict an earnings beat for Clorox this season. The company carries a Zacks Rank #4 (Sell) and an Earnings ESP of 0.00%. (Read More: Factors Setting the Tone for Clorox's Q1 Earnings)

The Clorox Company Price and EPS Surprise

The Clorox Company Price and EPS Surprise

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

Avon Products Inc’s AVP bottom line in third-quarter 2019 is expected to reflect gains from the ‘Open Up Avon’ initiative and cost-saving efforts. Moreover, improvement of digital tools and the e-commerce channel has been bolstering Average Representatives sales. This trend is most likely to have continued in the third quarter. However, softness across the company’s Europe, Middle East & Africa segment is anticipated to have affected its performance.

The Zacks Consensus Estimate for Avon’s third-quarter earnings is pegged at 3 cents, indicating growth from the prior-year quarter’s reported figure. It recorded break-even results in the prior-year quarter. Notably, the consensus mark has been unchanged over the past 30 days. The consensus mark for revenues is pegged at $1,226 million, which indicates a fall of nearly 14% from the figure reported in the year-ago quarter.

Our proven model does not conclusively predict an earnings beat for Avon this season. The company carries a Zacks Rank #3 and an Earnings ESP of 0.00%. (Read More: Things You Should Know Prior to Avon's Q3 Earnings)

Avon Products, Inc. Price and EPS Surprise

Avon Products, Inc. Price and EPS Surprise

Avon Products, Inc. price-eps-surprise | Avon Products, Inc. Quote

The Estee Lauder Companies Inc’s EL first-quarter fiscal 2020 revenues are expected to have significantly gained from the rising demand for skincare products along with its focus on innovation, and prudent marketing and advertising efforts. Further, results are likely to reflect the benefits from the Leading Beauty Forward savings initiative, strong online sales and a robust travel retail network. However, potential tariff impacts, foreign currency headwinds and soft brick-and-mortar traffic in the company’s U.S. stores are expected to have affected its performance.

The Zacks Consensus Estimate for its earnings has been unchanged in the past 30 days at $1.60, which suggests rise of 13.5% from the year-ago quarter’s figure. The consensus mark for revenues is pegged at $3,837 million, which indicates an increase of 9.2% from the prior-year quarter’s reported figure.

Our proven model does not conclusively predict an earnings beat for Estee Lauder this time around. The company has a Zacks Rank #3 and an Earnings ESP of -0.11%. (Read More: Factors Shaping the Fate of Estee Lauder's Q1 Earnings)

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

Today's Best Stocks from Zacks

Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.

This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.

See their latest picks free >>


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
 
The Estee Lauder Companies Inc. (EL) : Free Stock Analysis Report
 
Avon Products, Inc. (AVP) : Free Stock Analysis Report
 
The Clorox Company (CLX) : Free Stock Analysis Report
 
Church & Dwight Co., Inc. (CHD) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.