he Procter & Gamble Company
) is set to report its first quarter fiscal 2014 results on Oct
25 before the market opens. Last quarter, it posted an earnings
surprise of 2.60%. Let's see how things are shaping up for this
Factors to Consider this Quarter
P&G expects several headwinds to hurt the first half 2014
earnings growth, which are expected to dissipate in the second
half. Earnings are expected to decline in the first quarter and
improve only slightly in the second quarter due to several
headwinds including unfavorable impact of foreign exchange,
higher marketing investments and increased manufacturing startup
costs. Earnings are expected to improve strongly in the second
In fiscal 2014, the company expects to face headwinds from a
weaker underlying market growth, a much stronger dollar, higher
commodity costs, and a highly competitive operating environment.
However, the company expects to combat these headwinds on the
back of accelerated productivity gains and cost savings, improved
operating discipline, investments in promising innovation and
go-to-market capabilities, and further growth in core
Our proven model does not conclusively show that P&G is
likely to beat earnings this quarter. That is because a stock
needs to have both a positive
and a Zacks Rank of #1, 2 or 3 for this to happen. That is not
the case here, as you will see below.
Negative Zacks ESP:
The Earnings ESP is -1.91%. That is because the Most Accurate
estimate stands at $1.03 while the Zacks Consensus Estimate is
higher at $1.05. That is a difference of -1.91%.
Zacks Rank #3 (Hold):
P&G carries a Zacks Rank #3 (Hold), which lowers the
predictive power of ESP because a Zacks Rank #3 (Hold) when
combined with a negative ESP makes surprise prediction difficult.
We caution against stocks with Zacks Rank #4 and 5 (Sell-rated
stocks) going into the earnings announcement, especially when the
company is seeing negative estimate revisions momentum.
PROCTER & GAMBL (PG): Free Stock Analysis
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