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Factors Setting Tone for Procter & Gamble's (PG) Q3 Earnings

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The Procter & Gamble Company (PG - Free Report) is set to report third-quarter fiscal 2020 results on Apr 17, before the opening bell. In the last reported quarter, the leading branded consumer products company delivered a positive earnings surprise of 3.7%. Moreover, its bottom line beat estimates by nearly 5%, on average, over the trailing four quarters.

The Zacks Consensus Estimate for the company’s fiscal second-quarter earnings stands at $1.09, indicating 2.8% growth from the year-ago quarter’s reported figure. However, the consensus mark has been moved south by a penny in the past 30 days. For fiscal third-quarter revenues, the consensus mark is pegged at $16.95 billion, suggesting a 3% increase from the prior-year quarter’s reported figure.

Procter & Gamble Company (The) Price and EPS Surprise

 

Procter & Gamble Company (The) Price and EPS Surprise

Procter & Gamble Company (The) price-eps-surprise | Procter & Gamble Company (The) Quote

Key Factors to Note

Procter & Gamble has been consistently delivering strong earnings and sales performance. Strong organic sales growth, backed by higher shipment volume and favorable price/mix, has been a key driver for earnings. Further, the company’s growth initiatives, including product improvement through innovation, packaging and marketing efforts, are likely to have aided the top and bottom lines in the to-be-reported quarter.

Despite the coronavirus outbreak in the United States, Procter & Gamble’s employees in the manufacturing and distribution facilities continue to work to provide critical health, hygiene and cleaning products to consumers and essential businesses. The company’s facilities have been deemed essential and are continuing operations. Although the coronavirus outbreak will have some impacts, the company’s third-quarter fiscal 2020 results are likely to reflect benefits from the continued functioning of its businesses.

Management has also been focusing on productivity and cost-saving plans, which might have cushioned margins in third-quarter fiscal 2020. The company’s continued investment in business, and balanced top and bottom-line growth alongside efforts to offset macro cost headwinds underscores its productivity efforts. The actions have been aiding Procter & Gamble in the past few quarters.

Additionally, the company has been focusing on improving the product portfolio through strategic initiatives, which has been enabling it to concentrate on its fast-growing businesses.

While the aforementioned factors raise optimism about the upcoming quarterly results, we remain wary of the adverse impacts of currency fluctuations on the company’s top and bottom lines.

Zacks Model

Our proven model predicts an earnings beat for Procter & Gamble this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Procter & Gamble has a Zacks Rank #3 and an Earnings ESP of +0.80%.

Other Stocks Poised to Beat Earnings Estimates

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

The Clorox Company (CLX - Free Report) has an Earnings ESP of +1.81% and it sports a Zacks Rank #1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Kellogg Company (K - Free Report) currently has an Earnings ESP of +2.41% and a Zacks Rank #3.

Kimberly-Clark Corporation (KMB - Free Report) presently has an Earnings ESP of +1.17% and a Zacks Rank of 3.

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