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The Procter & Gamble Company (PG - Analyst Report) is set to report second-quarter fiscal 2014 results on Jan 24, before the market opens. Last quarter, it posted in-line results. Let’s see how things are shaping up for this announcement.

Factors to Consider this Quarter

P&G expects several headwinds to hurt first-half 2014 earnings growth, which are expected to dissipate in the second half. In the first quarter, though volume performance was decent, margins were relatively weaker due to currency headwinds, unfavorable mix and higher commodity and manufacturing startup costs.

The second quarter is expected to face similar currency headwinds as in the first. Moreover, management expects higher promotional headwinds in the quarter mainly related to product launches in the North American fabric care and beauty businesses. Overall, management expects adjusted earnings to remain in the range of flat to slightly down in the first half.

Earnings are expected to improve in the second half, driven by accelerated productivity gains and cost savings and moderating currency headwinds.

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  and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here, as you will see below.

Zacks ESP:  The Earnings ESP is 0.0%.

Zacks Rank #4 (Sell).We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

Here are some other companies in the consumer staples sector that can be considered as our model shows that they have the right combination of elements to post an earnings beat this quarter:

The Hershey Company (HSY - Analyst Report), Earnings ESP of +2.35% and a Zacks Rank #2 (Buy).

The Clorox Company (CLX - Analyst Report), Earnings ESP of +2.20% and a Zacks Rank #3 (Hold).

Starbucks Corporation (SBUX - Analyst Report), Earnings ESP of +2.90% and a Zacks Rank #3.

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