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Personal Care Stocks Q2 Earnings to Watch on Aug 2: PG, AVP
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With the Q2 earnings season (or the quarter ended Jun 30, 2016) past the halfway mark, several companies are scheduled to report their financial results this week. As of Jul 29, 2016, almost 60% of the S&P members have already reported their quarterly earnings.
Per the Zacks Earnings Trends report, despite the sequential improvement in earnings this will likely be the fifth consecutive quarter to report earnings decline. Interestingly, this quarter is seeing positive revenue growth and is currently outperforming the trend displayed in the preceding quarter.
The Q2 earnings season is critical for investors to ascertain the most attractive picks as the market has begun to stabilize after Brexit, which shook the global economy in Jun 2016. Post Brexit, investors have become jittery and are resorting to safe haven stocks. In this scenario, the consumer staples sector might be quite reliable.
Overall, the consumer sector has reported modest results this quarter. Lower gas prices, an improving job scenario and increasing consumer confidence have been supporting the improvement in results.
Although energy prices seem to have improved, it is hovering at a low level. Moreover, given the modest improvement in the job scenario consumers have partly cleared their debts and have started spending more on discretionary items, which is in turn, driving revenues for these companies.
In the consumer staples sector, 51.6% companies had reported Q2 earnings as of Jul 29. Out of these, 81.3% of the companies have posted an earnings beat, while 43.8% have surpassed the revenue estimates. Leading firms from the sector like Dr. Pepper Snapple Inc. , Altria Group Inc. (MO - Free Report) , The Hershey’s Company (HSY - Free Report) delivered stellar Q2 results despite currency headwinds and the sluggishness in emerging markets.
Though total earnings for the sector are expected to dip 1.4% due to flat revenues and 0.2% lower margins, the sector might prove to be profitable in the long term.
Let us now consider two consumer staples stocks which deal with personal care products – The Procter & Gamble Company (PG - Free Report) and Avon Products Inc. and see how they are poised before the scheduled announcements on Aug 2.
We expect The Procter & Gamble Company to beat expectations when it reports earnings this quarter. This is because the company has an Earnings ESP of +2.70% and carries a Zacks Rank #3 (Hold), which is a very meaningful and a leading indicator of a likely positive earnings surprise. P&G has been focused on top-line growth by increasing investments, which in turn, helped it report better-than-expected revenues in the prior quarter.
The consumer goods company beat estimates in the past four quarters with an average positive surprise of 5.73%. Moreover, pricing gains, productivity savings and lower overhead costs should provide support the bottom line despite top-line pressures. The Zacks Consensus Estimate for the current quarter is pegged at 74 cents. (Read more: Procter & Gamble Q4 Earnings: What's in the Cards?)
Our proven model does not conclusively show that is global beauty retailer Avon Products likely to beat on earnings this quarter. Though the company has an Earnings ESP of +33.33%, it carries a Zacks Rank #5 (Strong Sell). We caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions. Also, the company’s earnings lagged the Zacks Consensus Estimate in three of the trailing four quarters with an average negative surprise of 187.5%.
Avon is progressing with its strategic endeavors to boost top-line growth, trim costs and improve working capital. Moreover, the company has been exiting operations in underperforming markets. However, Avon is struggling to grow its earnings and revenues amid adverse currency fluctuations. This apart, the company’s highly leveraged balance sheet is expected to negatively impact its top line in the to-be-reported quarter. Further, management expects currency woes to linger throughout 2016 and adversely affect results. Notably, estimates have been revised downward for Q2. The Zacks Consensus Estimate is pegged at 3 cents for the quarter. (Read more: Avon to Report Q2 Earnings: Will the Stock Disappoint?)
Stay tuned! Check later on our full write-up on earnings releases of these stocks.
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Personal Care Stocks Q2 Earnings to Watch on Aug 2: PG, AVP
With the Q2 earnings season (or the quarter ended Jun 30, 2016) past the halfway mark, several companies are scheduled to report their financial results this week. As of Jul 29, 2016, almost 60% of the S&P members have already reported their quarterly earnings.
Per the Zacks Earnings Trends report, despite the sequential improvement in earnings this will likely be the fifth consecutive quarter to report earnings decline. Interestingly, this quarter is seeing positive revenue growth and is currently outperforming the trend displayed in the preceding quarter.
The Q2 earnings season is critical for investors to ascertain the most attractive picks as the market has begun to stabilize after Brexit, which shook the global economy in Jun 2016. Post Brexit, investors have become jittery and are resorting to safe haven stocks. In this scenario, the consumer staples sector might be quite reliable.
Overall, the consumer sector has reported modest results this quarter. Lower gas prices, an improving job scenario and increasing consumer confidence have been supporting the improvement in results.
Although energy prices seem to have improved, it is hovering at a low level. Moreover, given the modest improvement in the job scenario consumers have partly cleared their debts and have started spending more on discretionary items, which is in turn, driving revenues for these companies.
In the consumer staples sector, 51.6% companies had reported Q2 earnings as of Jul 29. Out of these, 81.3% of the companies have posted an earnings beat, while 43.8% have surpassed the revenue estimates. Leading firms from the sector like Dr. Pepper Snapple Inc. , Altria Group Inc. (MO - Free Report) , The Hershey’s Company (HSY - Free Report) delivered stellar Q2 results despite currency headwinds and the sluggishness in emerging markets.
Though total earnings for the sector are expected to dip 1.4% due to flat revenues and 0.2% lower margins, the sector might prove to be profitable in the long term.
Let us now consider two consumer staples stocks which deal with personal care products – The Procter & Gamble Company (PG - Free Report) and Avon Products Inc. and see how they are poised before the scheduled announcements on Aug 2.
We expect The Procter & Gamble Company to beat expectations when it reports earnings this quarter. This is because the company has an Earnings ESP of +2.70% and carries a Zacks Rank #3 (Hold), which is a very meaningful and a leading indicator of a likely positive earnings surprise. P&G has been focused on top-line growth by increasing investments, which in turn, helped it report better-than-expected revenues in the prior quarter.
The consumer goods company beat estimates in the past four quarters with an average positive surprise of 5.73%. Moreover, pricing gains, productivity savings and lower overhead costs should provide support the bottom line despite top-line pressures. The Zacks Consensus Estimate for the current quarter is pegged at 74 cents. (Read more: Procter & Gamble Q4 Earnings: What's in the Cards?)
PROCTER & GAMBL Price and EPS Surprise
PROCTER & GAMBL Price and EPS Surprise | PROCTER & GAMBL Quote
Our proven model does not conclusively show that is global beauty retailer Avon Products likely to beat on earnings this quarter. Though the company has an Earnings ESP of +33.33%, it carries a Zacks Rank #5 (Strong Sell). We caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions. Also, the company’s earnings lagged the Zacks Consensus Estimate in three of the trailing four quarters with an average negative surprise of 187.5%.
AVON PRODS INC Price and EPS Surprise
AVON PRODS INC Price and EPS Surprise | AVON PRODS INC Quote
Avon is progressing with its strategic endeavors to boost top-line growth, trim costs and improve working capital. Moreover, the company has been exiting operations in underperforming markets. However, Avon is struggling to grow its earnings and revenues amid adverse currency fluctuations. This apart, the company’s highly leveraged balance sheet is expected to negatively impact its top line in the to-be-reported quarter. Further, management expects currency woes to linger throughout 2016 and adversely affect results. Notably, estimates have been revised downward for Q2. The Zacks Consensus Estimate is pegged at 3 cents for the quarter. (Read more: Avon to Report Q2 Earnings: Will the Stock Disappoint?)
Stay tuned! Check later on our full write-up on earnings releases of these stocks.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>