Will Colgate-Palmolive Beat in 4Q?

World’s leading consumer goods dealer, Colgate-Palmolive Company (CL - Analyst Report) is likely to beat the expectations when it reports its fiscal 2012 fourth-quarter results on Jan 31.

Why a Likely Positive Surprise?

Our proven model shows that Colgate-Palmolive may beat the earnings because it has the right combination of two key components – Positive Earnings ESP (Read: Zacks Earnings ESP: A Better Method) and a Zacks Rank #2.

Zacks ESP: Colgate-Palmolive currently has an Earnings ESP of +1.43%. This is because the Most Accurate Estimate stands at $1.42, while the Zacks Consensus Estimate is pegged at $1.40.

Zacks #2 Rank (Buy): Note that stocks with Zacks Rank #1, #2 and #3 have significantly higher chances of beating the earnings. The sell rated stocks (#4 and #5) should never be considered going into an earnings announcement.

The combination of Colgate-Palmolive’s Zacks Rank #2 (Buy) and Earnings ESP of +1.43% make us confident regarding a positive earnings beat by the company on Jan 31.

What is driving the Better-than-Expected Earnings?

We believe that the company’s strategic acquisition and divestment activities, along with sustained focus on product innovation, provide it a platform to take advantage of growth opportunities, and thereby augment profitability.

The company has met as well as surpassed the Zacks Consensus Estimate in trailing four quarters with an average surprise of approximately 0.8%.

Other Stocks to Consider

Colgate-Palmolive is not the only firm looking up this earnings season. The following companies – Colgate’s industry peers – are also likely to beat the earnings in the to-be-reported quarter:

Proctor & Gamble Company (PG - Analyst Report) with Earnings ESP of +2.08% and a Zacks Rank #2 (Buy).

The CloroxCompany (CLX - Analyst Report) with Earnings ESP of +1.24% and a Zacks Rank #3 (Hold).

Inter Perfums Inc. (IPAR - Snapshot Report) has Earnings ESP of +13.33% and carries a Zacks Rank #3 (Hold).