Credit: Shutterstock photoThe Procter & Gamble CompanyPG is set to report first-quarter fiscal 2016 results on Oct 23, before the market opens. Last quarter, the company delivered a positive earnings surprise of 6.4%.
Let's see how things are shaping up for this announcement.
Factors at Play
P&G's sales performance has been sluggish over the past few quarters as a result of significant negative Fx impact, slower global growth and market share erosion/lower consumption in several countries due to pricing action undertaken to offset negative currency impacts and macroeconomic headwinds in a number of key markets. The sales trends are not expected to improve much in fiscal 2016 either.
Management warned that the top line in fiscal 2016 will be hurt by broader macro headwinds like economic slowdown in China and Brazil and significant currency headwinds in Russia, Ukraine, Japan and Venezuela.
Though the company is investing in its brands and products as well as re-designing the supply chain to improve results, going forward, we believe that these efforts will take time to deliver results.
Earnings Whispers
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 Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below.
Zacks ESP: The Earnings ESP for P&G is 0.00% as the Most Accurate estimate as well as the Zacks Consensus Estimate of 95 cents.
Zacks Rank: P&G's Zacks Rank #3 when combined with a 0.00% ESP makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Stocks to Consider
Some stocks in the broader consumer staples sector that have both a positive Earnings ESP and a favorable Zacks Rank are:
The J. M. Smucker Company SJM , with an Earnings ESP of +0.66% and a Zacks Rank #2 (Buy)
Lancaster Colony Corporation LANC , with an Earnings ESP of +2.22% and a Zacks Rank #2
Pinnacle Foods Inc. PF , with an Earnings ESP of +2.22% and a Zacks Rank #3 (Hold)
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PROCTER & GAMBL (PG): Free Stock Analysis Report
SMUCKER JM (SJM): Free Stock Analysis Report
PINNACLE FOODS (PF): Free Stock Analysis Report
LANCASTER COLON (LANC): Free Stock Analysis Report
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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.
