Consumer goods bellwether, The Clorox CompanyCLX is slated to report first-quarter fiscal 2017 results on Nov 2. Last quarter, the company delivered a negative earnings surprise of 1.6%, though it has outperformed the Zacks Consensus Estimate by an average of 7.2% over the trailing four quarters, with a beat in the other three quarters. Let's see how things are shaping up for this announcement.
CLOROX CO Price and EPS Surprise
Factors Influencing This Quarter
Clorox's significant global presence exposes the company to adverse foreign currency movements, which have been hurting its results for a while now. The company had earlier stated that it expects these fluctuations, tough year-over-year comparisons and a challenging macroeconomic environment to impact results in fiscal 2017.
While these factors might worry investors, the company's key strategies, cost saving efforts and efficient pricing bode well, as they are likely to drive margins. Also, management remains keen on the execution of its 2020 Strategy, which is aimed at boosting growth and overall market share. All these factors caused the company to provide a robust sales and earnings outlook for fiscal 2017, as management remains confident of its core business strategies.
Given the pros and cons, its best to wait and see if Clorox can revert to its solid trend this quarter.
Our proven model does not conclusively show that Clorox is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below:
Zacks ESP: Clorox currently has an Earnings ESP of -0.70%. This is because the Most Accurate estimate of $1.41 stands below the Zacks Consensus Estimate of $1.42. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
Zacks Rank: Clorox's Zacks Rank #2 (Buy) increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.
We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks that Warrant a Look
Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
Avon Products Inc. AVP , scheduled to release earnings on Nov 3, has an Earnings ESP of +33.33% and a Zacks Rank #1 (Strong Buy).
Marinemax Inc. HZO , expected to release earnings on Nov 1, has an Earnings ESP of +31.82% and a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here .
Big Lots Inc. BIG , expected to release earnings on Dec 2, has an Earnings ESP of +50.00% and a Zacks Rank #2.
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