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Factors That Hold Key to Procter & Gamble's (PG) Q3 Earnings

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The Procter & Gamble Company (PG - Free Report) is set to report third-quarter fiscal 2021 results on Apr 20, before the opening bell. This leading branded consumer products company is likely to have witnessed revenue and earnings growth in the to-be-reported quarter. The Zacks Consensus Estimate for the company’s fiscal third-quarter earnings stands at $1.19 per share, indicating a 1.7% increase from the year-ago quarter’s reported figure. The consensus mark has remained stable in the past 30 days. For fiscal third-quarter revenues, the consensus mark is pegged at $17.8 billion, suggesting 3.6% growth from the prior-year quarter’s reported figure.

In the last reported quarter, the company delivered an earnings surprise of 8.6%. Moreover, its bottom line beat estimates by 10.5%, on average, over the trailing four quarters.

Key Factors to Note

Procter & Gamble has been gaining from strong demand for daily health, hygiene and cleaning products, including hand sanitizers, soaps, toilet paper, surface cleaners, disinfecting wipes, and other essentials. This continued demand momentum is reflected by the underlying strength in brands and appropriate strategies, which have been aiding organic sales growth. Moreover, growth of premium home, health and hygiene products along with strength in the North American business mainly due to an increase in the pandemic-led consumption and inventory has been the reason behind the company’s positive mix. Such endeavors are likely to have aided revenues in the to-be-reported quarter.

Apart from these, Procter & Gamble has been focused on productivity and cost-saving plans to boost margins. Continued investments in business alongside efforts to offset macro cost headwinds and balance top and bottom-line growth underscore its productivity efforts. It has been witnessing cost savings and efficiency improvements across all facets of the business, driven by its second five-year productivity program. Moreover, gains from productivity savings and pricing have been aiding its margins and the trend is likely to have continued in the fiscal third quarter.

Despite such upsides, the adverse impacts of currency fluctuations on the company’s top and bottom lines remain concerning. Moreover, core earnings per share are expected to have been impacted by higher freight costs and  the combined impact of rising interest expenses and reduced interest income.

Procter & Gamble Company The Price and EPS Surprise

Zacks Model

Our proven model doesn’t conclusively predict an earnings beat for Procter & Gamble this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Procter & Gamble has a Zacks Rank #4 (Sell) and an Earnings ESP of 0.00%.

Stocks Poised to Beat Earnings Estimates

Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season:

Sanderson Farms, Inc. has an Earnings ESP of +3.13% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Mondelez International (MDLZ - Free Report) has an Earnings ESP of +2.29% and a Zacks Rank #3, at present.

Nomad Foods Limited (NOMD - Free Report) currently has an Earnings ESP of +0.73% and a Zacks Rank #3.

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