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Clorox (CLX) Q2 Earnings: Stock Set to Gain on Likely Beat?

We expect consumer goods behemoth, The Clorox CompanyCLX to beat expectations when it reports second-quarter fiscal 2017 results after the market closes on Feb 3.

Last quarter, the company reported a negative earnings surprise of 4.2%. However, the bottom line has outperformed the Zacks Consensus Estimate by an average of 3.2% in the trailing four quarters. Let's see how things are shaping up for this announcement.

Clorox Company (The) Price, Consensus and EPS Surprise

Clorox Company (The) Price, Consensus and EPS Surprise | Clorox Company (The) Quote

Why a Likely Positive Surprise?

Our proven model shows that Clorox may beat earnings because it has the right combination of the two key components.

Zacks ESP: Clorox currently has an Earnings ESP of +0.82%. This is because the Most Accurate estimate stands at $1.23, while the Zacks Consensus Estimate is pegged lower at $1.22. A favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive earnings surprise. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks Rank: Clorox carries a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating earnings. Conversely, Sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement.

The combination of Clorox's Zacks Rank #3 and positive ESP make us reasonably confident of a positive earnings beat.

What's Driving the Better-than-Expected Earnings?

Clorox has outperformed the Zacks categorized Soap and Cleaning Preparations industry in the last three months, as its shares have gained 2.9%, compared to the industry's growth of 0.5%.

The company remains keen on improving the demand for its products by enhancing brand value through innovations and stepping up digital marketing. Further, management is pleased with the solid start to fiscal 2017, which witnessed solid sales and volume growth across most segments, alongside delivering impressive gross margin - reflecting its focus on 2020 Strategy. This strategy, which is aimed at boosting growth and overall market share, has been helping the company achieve cost savings and productivity enhancements. Management expects to sustain its superb momentum as it remains confident of its core business plans, thus ushering in confidence about the upcoming results.

Other 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:

Michael Kors Holdings Ltd. KORS , scheduled to report earnings on Feb 7, 2017, currently has an Earnings ESP of +2.45% and a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank stocks here .

Yum Brands Inc. YUM , slated to release earnings on Feb 8, 2017, currently has an Earnings ESP of +2.82% and a Zacks Rank #3.

Campbell Soup Company CPB , expected to release earnings on Feb 23, 2017, currently has an Earnings ESP of +1.15% and a Zacks Rank #2.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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