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EL Vs CLX: Which Stock is Poised for Better Q2 Earnings?
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The fourth-quarter earnings season has turned out to be pretty well so far, especially on the revenue front. In fact, the season has been witnessing a sturdy revenue momentum, above average proportion of positive surprises alongside a favorable revisions trend for the present and the upcoming quarters.
Per the lastest Earnings Outlook, nearly 185 S&P 500 members have already reported results. Of these, approximately 82.2% delivered a positive earnings surprise while 80% surpassed the top-line expectations. Notably, earnings for these companies have improved 13.3% from the year-ago quarter with revenues up 8.2%.
For the fourth quarter as a whole, total earnings for the S&P 500 index are projected to rise 11.9% year over year on 7.6% growth in revenues.
A Look at Consumer Staples Sector
Soap & cleaning materials and Cosmetics stocks form part of the Consumer Staples sector. The sector is poised to benefit from the buoyant U.S. economy, supported by rising consumer confidence, modest consumer spending and a steady labor market.
Furthermore, we note that the performance of the index depends upon all 16 Zacks sectors, out of which two sectors are expected to witness an earnings decline in the current quarter. Though the Consumer Staples sector has gained 5.3% in the last three months, it has lagged the S&P 500’s growth of 9.6%. However, the sector is likely to witness a year-over-year growth of 5.9% and 2.5% in earnings and revenues, respectively.
Our research shows that when a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) stock is combined with a positive Earnings ESP, the chance of beating earnings estimates is high. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
All said, let’s see what awaits this Consumer Staples duo which is slated to report quarterly results on Feb 2.
What’s in Store for EL and CLX?
The Estee Lauder Companies Inc. (EL - Free Report) has been gaining from its solid focus on buyouts and product launches, sturdy foothold in the beauty space and robust online business. Driven by these efforts, this cosmetics giant marked its 13th and 3rd straight earnings and sales beat, respectively, in first-quarter fiscal 2018. While Estee Lauder has a solid presence in emerging markets, solid prospects from China appear bright as sales in this region soared nearly 50% in the first quarter. Management thus envisions continued strength in luxury products in China, which keeps it encouraged about making incremental investments in the region. Notably, the Zacks Consensus Estimate for sales from Asia/Pacific region is pegged at $763 million, depicting year-over-year growth of 15.8%.
Moreover, the company’s skin care and makeup categories have been performing particularly well for nearly a year. We expect these categories to remain major drivers in the fiscal second quarter as well. The Zacks Consensus Estimate for skincare and makeup sales is currently pegged at $1,434 million and $1,515 million, reflecting year-over-year growth of about 15% and 16%, respectively. Also, the consensus mark for fragrance and hair care sales stands at $553 million and $147 million compared with the year-ago period sales of $497 million and $137 million, respectively.
Clearly, Estee Lauder is expected to continue with its top- and bottom-line growth trend in the second quarter. Management forecasts net sales growth of 13-15% in the quarter. On a constant currency basis, sales are expected to improve 10-11%. Further, the company envisions adjusted earnings in the range of $1.38-$1.41 per share for the to-be-reported quarter, thereby marking an increase of 13% to 15% over the prior-year earnings. Impressively, the Zacks Consensus Estimate of $1.44 for the second quarter moved up in the past 30 days, and represents more than 18% growth from the year-ago period. Moreover, analysts polled by Zacks expect revenues of $3,673 million, up 14.5% from the year-ago reported figure. (Read more: Will Skin Care, Makeup Fuel Estee Lauder in Q2 Earnings?)
Estee Lauder Companies, Inc. (The) Price, Consensus and EPS Surprise
Our Zacks model shows that Estee Lauder is likely to beat earnings estimates in the second quarter as it has the right elements for a beat. Apparently, it has an Earnings ESP of +0.06% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Next, The Clorox Company (CLX - Free Report) is well on track with its 2020 strategy aimed at bolstering growth for the improvement of categories and overall market share. The strategy is likely to be achieved through the key accelerators like investment in brands, development of e-commerce, technological advancements, enhancement of growth culture and focus on the 3Ds - desire, decision and delight. Despite a strong start to fiscal 2018, the company lowered its view for the period due to hurricane-related impacts and the divestiture of Aplicare business. Further, inflation as well as high commodity and logistics costs might dent gross margin. (Read more: Can Robust Strategies Fuel Clorox's Q2 Earnings?)
The company’s earnings have surpassed the Zacks Consensus Estimate in each of the last four quarters, with an average of 2.4%. Additionally, the consensus mark of $1.22 for the impending quarter has been stable in the last 30 days but reflects a year-over-year decline of 2.4%. Analysts polled by Zacks expect revenues of $1,430 million to be up about 1.7% from the year-ago quarter.
Clorox Company (The) Price, Consensus and EPS Surprise
However, our model shows that Clorox is unlikely to beat earnings estimates in the second quarter. The company has an Earnings ESP of -0.07%. Although its Zacks Rank #3 increases the predictive power of ESP, we need a positive Earnings ESP in order to be confident about an earnings surprise.
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EL Vs CLX: Which Stock is Poised for Better Q2 Earnings?
The fourth-quarter earnings season has turned out to be pretty well so far, especially on the revenue front. In fact, the season has been witnessing a sturdy revenue momentum, above average proportion of positive surprises alongside a favorable revisions trend for the present and the upcoming quarters.
Per the lastest Earnings Outlook, nearly 185 S&P 500 members have already reported results. Of these, approximately 82.2% delivered a positive earnings surprise while 80% surpassed the top-line expectations. Notably, earnings for these companies have improved 13.3% from the year-ago quarter with revenues up 8.2%.
For the fourth quarter as a whole, total earnings for the S&P 500 index are projected to rise 11.9% year over year on 7.6% growth in revenues.
A Look at Consumer Staples Sector
Soap & cleaning materials and Cosmetics stocks form part of the Consumer Staples sector. The sector is poised to benefit from the buoyant U.S. economy, supported by rising consumer confidence, modest consumer spending and a steady labor market.
Furthermore, we note that the performance of the index depends upon all 16 Zacks sectors, out of which two sectors are expected to witness an earnings decline in the current quarter. Though the Consumer Staples sector has gained 5.3% in the last three months, it has lagged the S&P 500’s growth of 9.6%. However, the sector is likely to witness a year-over-year growth of 5.9% and 2.5% in earnings and revenues, respectively.
Our research shows that when a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) stock is combined with a positive Earnings ESP, the chance of beating earnings estimates is high. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
All said, let’s see what awaits this Consumer Staples duo which is slated to report quarterly results on Feb 2.
What’s in Store for EL and CLX?
The Estee Lauder Companies Inc. (EL - Free Report) has been gaining from its solid focus on buyouts and product launches, sturdy foothold in the beauty space and robust online business. Driven by these efforts, this cosmetics giant marked its 13th and 3rd straight earnings and sales beat, respectively, in first-quarter fiscal 2018. While Estee Lauder has a solid presence in emerging markets, solid prospects from China appear bright as sales in this region soared nearly 50% in the first quarter. Management thus envisions continued strength in luxury products in China, which keeps it encouraged about making incremental investments in the region. Notably, the Zacks Consensus Estimate for sales from Asia/Pacific region is pegged at $763 million, depicting year-over-year growth of 15.8%.
Moreover, the company’s skin care and makeup categories have been performing particularly well for nearly a year. We expect these categories to remain major drivers in the fiscal second quarter as well. The Zacks Consensus Estimate for skincare and makeup sales is currently pegged at $1,434 million and $1,515 million, reflecting year-over-year growth of about 15% and 16%, respectively. Also, the consensus mark for fragrance and hair care sales stands at $553 million and $147 million compared with the year-ago period sales of $497 million and $137 million, respectively.
Clearly, Estee Lauder is expected to continue with its top- and bottom-line growth trend in the second quarter. Management forecasts net sales growth of 13-15% in the quarter. On a constant currency basis, sales are expected to improve 10-11%. Further, the company envisions adjusted earnings in the range of $1.38-$1.41 per share for the to-be-reported quarter, thereby marking an increase of 13% to 15% over the prior-year earnings. Impressively, the Zacks Consensus Estimate of $1.44 for the second quarter moved up in the past 30 days, and represents more than 18% growth from the year-ago period. Moreover, analysts polled by Zacks expect revenues of $3,673 million, up 14.5% from the year-ago reported figure. (Read more: Will Skin Care, Makeup Fuel Estee Lauder in Q2 Earnings?)
Estee Lauder Companies, Inc. (The) Price, Consensus and EPS Surprise
Estee Lauder Companies, Inc. (The) Price, Consensus and EPS Surprise | Estee Lauder Companies, Inc. (The) Quote
Our Zacks model shows that Estee Lauder is likely to beat earnings estimates in the second quarter as it has the right elements for a beat. Apparently, it has an Earnings ESP of +0.06% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Next, The Clorox Company (CLX - Free Report) is well on track with its 2020 strategy aimed at bolstering growth for the improvement of categories and overall market share. The strategy is likely to be achieved through the key accelerators like investment in brands, development of e-commerce, technological advancements, enhancement of growth culture and focus on the 3Ds - desire, decision and delight. Despite a strong start to fiscal 2018, the company lowered its view for the period due to hurricane-related impacts and the divestiture of Aplicare business. Further, inflation as well as high commodity and logistics costs might dent gross margin. (Read more: Can Robust Strategies Fuel Clorox's Q2 Earnings?)
The company’s earnings have surpassed the Zacks Consensus Estimate in each of the last four quarters, with an average of 2.4%. Additionally, the consensus mark of $1.22 for the impending quarter has been stable in the last 30 days but reflects a year-over-year decline of 2.4%. Analysts polled by Zacks expect revenues of $1,430 million to be up about 1.7% from the year-ago quarter.
Clorox Company (The) Price, Consensus and EPS Surprise
Clorox Company (The) Price, Consensus and EPS Surprise | Clorox Company (The) Quote
However, our model shows that Clorox is unlikely to beat earnings estimates in the second quarter. The company has an Earnings ESP of -0.07%. Although its Zacks Rank #3 increases the predictive power of ESP, we need a positive Earnings ESP in order to be confident about an earnings surprise.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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