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4 Winning Consumer Staples Stock Bets for This Earnings Season

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Strong results from PepsiCo (PEP - Free Report) early this month marked a stellar start to the September quarter reporting cycle for the Consumer Staples sector. Upcoming results from arch-rival Coca-Cola (KO - Free Report) and another industry player Procter & Gamble (PG - Free Report) should set the tone for the sector this earnings season.

Companies in the sector are likely to have benefited from efforts to boost productivity, product launches and enhanced focus on investments and innovation. Further, sector players’ results in this reporting cycle should reflect the effects of improved pricing, packaging and marketing initiatives, and restructuring actions — including acquisitions and divestitures. Notable progress in cost-containment and productivity enhancement is likely to have worked in favor as well. These factors have been boosting revenues for these companies for quite a while now and this reporting cycle is unlikely to be an exception.

Players in this space, however, grapple with escalating raw material and transportation costs. These along with the damaging US-China trade war, uncertain global markets, higher operating expenses due to advertising investments and unfavorable currency rates should show on current-quarter margins and profitability of the companies. Further, heightened competition, price wars and aggressive promotional activities are likely to have impacted margins.

Nonetheless, this consumer-driven sector sees inelastic demand as it covers industries like beverages, food retailers, food products, household products, personal products and tobacco. Moreover, steady income growth and a strong labor market are likely to reflect in the sector’s revenue results for the quarter under review.

Per the latest Earnings Trends, the Consumer Staples sector’s current-quarter revenues are expected to increase 5.2% while earnings are likely to decline 4.5%.

4 Consumer Staples Stocks to Win Big This Earnings Season

With the help of our Zacks Stock Screener, we have identified a few Consumer Staples stocks poised to beat the Zacks Consensus Estimate this earnings season. Our research shows that for stocks with the combination of a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP, the chance of a positive earnings surprise is as high as 70%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

US Foods Holding Corp. (USFD - Free Report) markets and distributes fresh, frozen, and dry food and non-food products to foodservice customers in the United States. The company, which is expected to report earnings on Nov 5, has an average positive earnings surprise of 2.1% for the trailing four quarters. The Zacks Consensus Estimate for current-quarter earnings is pegged at 60 cents, suggesting growth of 8.6% from the year-ago reported figure. US Foods Holding has an Earnings ESP of +3.33% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

US Foods Holding Corp. Price and EPS Surprise

US Foods Holding Corp. Price and EPS Surprise

US Foods Holding Corp. price-eps-surprise | US Foods Holding Corp. Quote

Estee Lauder Companies Inc. (EL - Free Report) , which has an Earnings ESP of +0.63% and a Zacks Rank #2, is also a solid bet. This leading manufacturer and marketer of skin care, makeup, fragrance and hair care products is expected to report earnings on Oct 31. The company has an average positive earnings surprise of 17.1% for the trailing four quarters. The Zacks Consensus Estimate for its current-quarter earnings is pegged at $1.60, suggesting growth of 13.3% from the year-ago reported figure.

Church & Dwight Co., Inc. (CHD - Free Report) provides a broad range of household, personal care and specialty products. The company operates in six countries and exports to over 90 other countries. Currently, it has an Earnings ESP of +1.64% and a Zacks Rank #2. The Zacks Consensus Estimate for its current-quarter earnings is pegged at 61 cents, suggesting year-over-year growth of 5.2%. The company has an average positive earnings surprise of 5.3% for the last four quarters. It is slated to report earnings on Oct 31.

Church & Dwight Co., Inc. Price and EPS Surprise

Church & Dwight Co., Inc. Price and EPS Surprise

Church & Dwight Co., Inc. price-eps-surprise | Church & Dwight Co., Inc. Quote

Kimberly-Clark Corporation (KMB - Free Report) , engaged in the manufacturing and marketing of a wide range of consumer products around the world, has an Earnings ESP of +1.66% and a Zacks Rank #3. The Zacks Consensus Estimate for its current-quarter earnings is pegged at $1.81, suggesting year-over-year growth of nearly 6%. The company has an average positive earnings surprise of 2.3% for the last four quarters. It is scheduled to report earnings on Oct 22.

Kimberly-Clark Corporation Price and EPS Surprise

Kimberly-Clark Corporation Price and EPS Surprise

Kimberly-Clark Corporation price-eps-surprise | Kimberly-Clark Corporation Quote

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