Soap-Cosmetic Stocks to Watch for Earnings on Nov 2: EL, CLX

The earnings reporting cycle for the quarter ended Sep 30, 2016, is moving ahead in full steam, with results of numerous companies scheduled for this week. The end of last week (ended Oct 28) brought the current reporting cycle near the half-way mark with results from over 58% of the S&P members already on board. Notably, this quarter has been persistently heading toward an improvement after five straight quarters of earnings decline.

Per our Earnings Preview report as of Oct 28, out of the 291 S&P 500 companies that have come up with their quarterly numbers, approximately 73.5% posted positive earnings surprises, while 57.4% beat top-line expectations. According to the report, earnings for the 291 S&P 500 companies that have reported so far are up 2.2% from the same period last year, while revenues have increased 1.3%. Clearly, this period is a significant one as both earnings and revenues are on the growth trajectory.

Further, the report projects that earnings for the total S&P 500 companies will improve 2% from the year-ago period with total revenue rising 1.4%. In second-quarter 2016, earnings for the S&P 500 companies declined 2.8%, whereas revenues were flat.

However, the performance of the index is decided by all 16 Zacks sectors, out of which four are expected to witness an earnings decline in the third quarter, with Auto, Oil/Energy and Transportation being major drags. Nonetheless, taking a look at the broader sector for the Soaps-Cosmetics industry - Consumer Staples, we note that it is poised for an improvement despite overseas turmoil, fluctuating commodity prices and the Fed's pending decision over the rate hike.

Evidently, we expect to see 5.4% growth in earnings and a 1.1% rise in sales for the consumer staples sector in third-quarter 2016. So far, nearly 53.1% of its members have reported results, of which 82.4% beat on earnings and 47.1% surpassed revenue estimates. Moreover, total earnings for these companies were up 5.4% year over year, with revenues climbing 1.6%.

That said, let's see what awaits the following Soap-Cosmetics stocks within the Consumer Staples sector that are queued up for first-quarter fiscal 2017 earnings releases on Nov 2, 2016.

Manufacturer and marketer of skin care, makeup, fragrance and hair care products - The Estee Lauder Companies Inc. ( EL ) is set to report its first-quarter fiscal 2017 results. While the company currently carries a Zacks Rank #3 (Hold), our earnings beat criteria was let down by its Earnings ESP of -1.27%. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.

Estee Lauder has been posting better-than-expected earnings results over the past several quarters on the back of solid organic sales growth, product innovation, acquisitions and cost-saving measures. We expect these positives, along with its recently launched Leading Beauty Forward initiative to have a favorable impact on the to-be-reported quarter as well.

However, macroeconomic pressures have been hurting sales of Estee Lauder's prestige beauty brands. Slow retail growth in China and soft sales in travel retail business are likely to affect the top line in the to-be-reported quarter. Moreover, destocking in the Middle East and soft tourism in France are expected to adversely impact sales during the quarter. (Read more: Estee Lauder to Report Q1 Earnings: What's in Store? )

ESTEE LAUDER Price and EPS Surprise

ESTEE LAUDER Price and EPS Surprise | ESTEE LAUDER Quote

Moving to The Clorox CompanyCLX , this soap and cleaning products producer and marketer carries an Earnings ESP of -0.70%, and was recently downgraded to a Zacks Rank #3. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

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. (Read more: Clorox Q1 Earnings: Can the Stock Get Back on Track? )

CLOROX CO Price and EPS Surprise

CLOROX CO Price and EPS Surprise | CLOROX CO Quote

Check later on our full write-up on earnings releases of these stocks.

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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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