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The Procter & Gamble Company (PG - Analyst Report) is set to report third-quarter fiscal 2014 results on Apr 23, before the market opens. Last quarter, it delivered positive earnings surprise of 0.83%. Let’s see how things are shaping up for this announcement.

Factors to Consider this Quarter

Currency headwinds, rising commodity costs, increasing competitive pressures, challenging consumer spending environment in the U.S. and volatile market dynamics in other countries are expected to hurt results in the third quarter. In fact, P&G lowered its fiscal 2014 sales and earnings forecasts in Feb 2014 to reflect the recent emerging-market currency devaluations.

In the second half of fiscal 2014, management expects stronger earnings growth in the fourth quarter than the third driven by accelerated productivity gains and cost savings, moderating currency headwinds, greater impact from new product innovation, accelerated pricing and no further negative impact from manufacturing start-up costs.

Earnings Whispers?

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.

Negative Zacks ESP:  The Earnings ESP is -0.98%.

Zacks Rank: P&G’s Zacks Rank #3 (Hold) when combined with a negative ESP lowers the predictive power of ESP.

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

Other stocks in the retail sector that have both a positive Earnings ESP and a favorable Zacks Rank are:

Church & Dwight Co. Inc. (CHD - Snapshot Report), with Earnings ESP of +1.37% and a Zacks Rank #3.

Reynolds American Inc. (RAI - Analyst Report), with Earnings ESP of +2.04% and a Zacks Rank #3.

The Cheesecake Factory Incorporated. (CAKE - Analyst Report), with Earnings ESP of +2.04% and a Zacks Rank #3.

Read the Full Research Report on PG
Read the Full Research Report on RAI
Read the Full Research Report on CAKE
Read the Full Research Report on CHD

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