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The Procter & Gamble Company (PG - Analyst Report) is set to report its fourth-quarter and fiscal 2013 results on Aug 1, before the market opens. Last quarter, it posted a 3.1% positive surprise. Let’s see how things are shaping up for this announcement.

Factors to Consider This Quarter

P&G’s fourth-quarter outlook is quite subdued with earnings expected to decline from the year-ago results due to higher taxes, increased commodity costs and currency headwinds. Moreover, higher marketing costs to drive its strong innovation pipeline could also dent profits.

Earnings are expected to range between 69 cents and 77 cents, representing a year-over-year decline in the range of 6%-16%. The tax rate is expected to be higher than that of last year.

Organic sales growth is expected to range between 3% and 4%. Foreign exchange is expected to hurt sales by 2%. Accordingly, net sales are expected to increase in the range of 1%-2%.

Earnings Whisper

Our proven model does not conclusively show that P&G is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP (Read: Zacks Earnings ESP: A Better Method) and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here, as you will see below.

Negative Zacks ESP:  The Earnings ESP is -1.30%.

Zacks #3 Rank (Hold): P&G carries a Zacks Rank #3 (Hold). We caution against stocks with Zacks #4 and #5 Ranks (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

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