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Key Factors Shaping Procter & Gamble's (PG) Q3 Earnings

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The Procter & Gamble Company (PG - Free Report) is set to report third-quarter fiscal 2019 results on Apr 23, before the opening bell.

The company boasts a robust earnings surprise history, having outpaced estimates for 15 straight quarters now. A glimpse of its earnings performance in the trailing four quarters showed that it delivered average positive surprise of 3.1%. Moreover, the company reported sales beat in five of the last six quarters.

The Zacks Consensus Estimate for the quarter under review is pegged at $1.04, which depicts an improvement of 4% year over year. However, estimates moved south in the last seven days. For total sales, the consensus mark stands at $16.4 billion, mirroring a 0.6% increase from the year-ago quarter.

How Things are Shaping Up for This Announcement

Procter & Gamble has been gaining from growth initiatives, including product improvement through innovation, packaging and marketing efforts. Management also remains focused on productivity and cost-saving plans, which should cushion margins. Its continued investment in business alongside efforts to offset macro cost headwinds and balance top and bottom-line growth underscore productivity efforts. These efforts have not only aided results in the past quarters but also boosted stock performance.

Shares of the company have increased 4.1% in the past month, outperforming the industry’s growth of 2.5%. This indicates a positive sentiment on the stock ahead of earnings. Additionally, the stock has witnessed growth of 34.9% in the past year.



Meanwhile, the company focuses on improving the product portfolio through the strategy of acquiring complementary businesses. It also follows a systematic divestiture plan to streamline the portfolio. Some of the company’s recent acquisitions, including First Aid Beauty, the consumer health business of Merck KGaA and Walker & Company Brands, are likely to bolster the product portfolio.

While the aforementioned factors raise optimism about the upcoming quarterly results, we remain wary of Procter & Gamble’s strained margins. Like most of its peers, higher commodity and shipment costs as well as increased cost of investments have been hurting margins. Adverse currency fluctuation is an additional headwind, which is likely to mar results in quarters ahead.

What the Zacks Model Unveils

Our proven model does not conclusively show that Procter & Gamble is likely to beat earnings estimates in the fiscal second quarter. This 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. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Procter & Gamble currently carries a Zacks Rank #3 and has an Earnings ESP of -0.63%. While the company’s favorable Zacks Rank increases the predictive power of ESP, a negative Earnings ESP makes surprise prediction difficult.

Stocks Poised to Beat Earnings Estimates

Here are some companies that you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

The Estee Lauder Companies Inc. (EL - Free Report) has an Earnings ESP of +1.39% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Kimberly-Clark Corporation (KMB - Free Report) has an Earnings ESP of +0.76% and a Zacks Rank of 2.

Altria Group, Inc. (MO - Free Report) has an Earnings ESP of +1.09% and a Zacks Rank #3.

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