Will Colgate-Palmolive (CL) Disappoint this Earnings Season? - Analyst Blog
Colgate-Palmolive Co. ( CL ) is scheduled to report its third-quarter fiscal 2014 results on Oct 24. Last quarter, this global dealer in consumer goods posted in-line earnings results. Let's see how things are shaping up for this announcement.
Factors Affecting the Upcoming Quarter
Colgate has posted in-line earnings results for the first two quarters of fiscal 2014. However, the company's top line has been missing estimates through the first half of fiscal 2014. We believe the company's bottom line is benefiting from cost saving initiatives under its funding-the-growth and 2012 Restructuring Program as well as higher pricing.
On the other hand, the company's sales results continue to suffer due to the negative impact of currency fluctuations. Moreover, the company continues to be affected by higher raw material prices and Packaging costs as these are slightly weighing on its margins.
Given the aforementioned factors, we believe the company's results for the upcoming quarter will reflect similar trends as witnessed in the first two quarters of this year. Thus, we are not very optimistic about the third-quarter results.
Our proven model does not conclusively project Colgate as likely to beat earnings this quarter. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 to surpass earnings estimates. However, this is not the case here due to the following factors:
Zacks ESP: ESP for Colgate is 0.00% since the Most Accurate estimate stands at 75 cents per share, which is in line with the Zacks Consensus Estimate.
Zacks Rank #4 (Sell): Colgate's Zacks Rank #4 when combined with a zero ESP makes surprise prediction unlikely. We caution against stocks with a Zacks Ranks #4 and #5 (Sell rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks that Warrant a Look
Here are some other companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat:
L Brands Inc.'s ( LB ) Earnings ESP stands at +3.13% and it carries a Zacks Rank #2 (Buy).
The New York Times Company ( NYT ) has an Earnings ESP of +100.0% and a Zacks Rank #2.
Home Depot Inc. ( HD ) with an Earnings ESP of +0.89% holds a Zacks Rank #3 (Hold).