The third-quarter 2016 earnings season has kick started and the investor community is engrossed in tallying the estimated earnings of companies with their actual outcomes. Stocks of companies that meet or beat expectations are rewarded with surging prices while the ones that miss, see falling share prices. No matter whether the results are good or bad, the reporting period is considered the ideal time to rebalance one’s portfolio.

Per the Earnings Trends report, published on Oct 19, 2016, the third-quarter earnings season looks quiet promising, with improved results from major banks clearing much of the dark clouds that had made the scenario gloomy in the last few quarters. The results so far have exhibited a larger number of companies coming out with positive surprises for both earnings and revenues. That said, we are hoping to see a positive third quarter overall, provided the trend seen thus far continues.

If our hopes come true, the third quarter is likely to mark the first positive quarter for the S&P 500 index after five consecutive quarters of earnings decline.

As of Oct 19, 81 S&P 500 members – that cumulatively account for 19.9% of the index’s total market capitalization – have reported earnings results. Total earnings for these index members are up 3.8% and revenues grew 3.6%, with 80.2% beating EPS estimates and 63% beating revenue estimates. Further, total S&P 500 earnings are expected to be down 1% on 1.5% higher revenues, which is a notable improvement from a 2.9% earnings decline predicted a few weeks earlier.

Coming to the consumer related sectors, Consumer Staples and Consumer Discretionary, have respectively seen 21.9% and 14.3% of its S&P 500 members report their third-quarter results. Of this, the Consumer Staples sector has an earnings beat ratio of 85.7% and the Consumer Discretionary sector has 80% earnings beat ratio. The third-quarter forecasts show that earnings for the Consumer Discretionary sector are expected to dip 0.1%, whereas revenues are anticipated to surge 11.7%. On the other hand, the Consumer Staples sector is expected to witness a 2.4% rise in earnings along with 1.3% improvement in revenues.

Of the earnings to be reported next week, we will focus on three consumer stocks which are expected to report third-quarter 2016 results on Oct 24.

To start with V.F. Corp. (VFC Quick QuoteVFC - Free Report) , we are unsure whether this designer and producer of branded apparel and related products will be able to post a positive earnings surprise in the quarter to-be-reported. The company’s past performance reveals that it has underperformed the Zacks Consensus Estimate by an average of 0.5% over the trailing four quarters. Despite beating earnings estimates for two consecutive quarters, V.F. Corp. continues to battle foreign currency headwinds, which have been affecting its performance. Further, management expects this to prevail and hurt the company’s ongoing performance. Additionally, the sale of Contemporary Brands business is likely to dent results in 2016.

However, V.F. Corp.’s solid brand portfolio and opportunities with regard to distribution bode well. Further, the company’s focus on strategic buyouts and expansion of global operations emphasize its growth prospects. The company carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. However, our criteria of earnings beat has been let down by an Earnings ESP of 0.00%. (Read more: V.F. Corp. Q3 Earnings: What's in Store this Quarter?)

Next, the earnings picture for Kimberly-Clark Corporation (KMB Quick QuoteKMB - Free Report) – a Texas-based manufacturer and seller of personal care, consumer tissue and professional products – looks vague. The company has positive earnings surprise history with an average beat of 1.2% in the trailing four quarters. However, the company’s Zacks Rank #4 (Sell) when combined with an Earnings ESP of 0.00%, makes surprise prediction difficult. Its Most Accurate estimate and the Zacks Consensus Estimate – both stand at $1.54.

Of late, Kimberly-Clark has been seeing sluggish top-line growth, evident from organic sales growth of just 3% in the last quarter. Further, unfavorable currency and increased competition are eroding sales growth. In such a scenario, the company is relying on cost saving measures and restructuring programs to drive earnings. It is also striving to reduce expenses and buying back shares in order to boost its profits. Kimberly-Clark anticipates the trend to continue in the third quarter as well. Hence, we are not very optimistic about its results in the upcoming quarter. (Read more: Kimberly-Clark Q3 Earnings: What's in the Cards?)

Also in queue is Eldorado Resorts Inc. , a gaming and hospitality company with gaming presence in Ohio, Louisiana, Nevada, Pennsylvania and West Virginia. Our proven model does not conclusively show that Eldorado Resorts is likely to beat earnings estimates 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. Eldorado Resorts has an Earnings ESP of 0.00% as the Most Accurate estimate and the Zacks Consensus Estimate both stand at 30 cents. The company carries a Zacks Rank #3, which increases the predictive power of ESP. However, its ESP of 0.00% makes surprise prediction difficult.

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