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Time to Buy These Consumer Staples Stocks Before Earnings?
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As we progress through earnings season, investors may want to pay attention to the Consumer Staples sector as there are quite a few stocks that could beat earnings expectations.
The combination of a bottom-line earnings beat with better-than-expected guidance can be a strong catalyst in the upward price movement of a stock. Here are three Consumer Staples stocks that could be geared to beat expectations and see their stocks rise with better-than-expected quarterly reports.
Starting the list and set to report its second-quarter fiscal 2023 earnings on January 19 is Procter & Gamble. Landing a Zacks Rank #3 (Hold) Proctor & Gamble is expected to see solid annual top and bottom-line growth.
Proctor & Gamble’s three segments include products for Beauty, Grooming, and Health Care. Earnings estimates for the current quarter have started to trend higher over the last week leading up to the report at $1.58 per share.
Image Source: Zacks Investment Research
Year over year, PG’s earnings are expected to be virtually flat in fiscal 2023 but pop 7% in FY24 at $6.24 per share. Fiscal 2023 earnings estimates have remained unchanged and started to trend higher again for FY24. On the top line, sales are projected to be down -1% for Q2 at $20.61 billion. Annual sales are forecasted to be flat in FY23 but rise 4% in FY24 to $82.91 billion.
More importantly, FY24 would represent 22% growth from pre-pandemic levels which is impressive for a mature company of Proctor & Gambles’ size.
Image Source: Zacks Investment Research
Proctor and Gamble stock is down -9% over the last year compared to the S&P 500’s -14%. This has mostly been on par with the Zacks Soap & Cleaning Preparations Markets -6%. Even better, when including its dividend, PG’s total return over the last five years is +84% to easily beat the benchmark’s +56% and its Zack Subindustry’s +39%.
Image Source: Zacks Investment Research
In regard to PG’s dividend, the annual yield is 2.43% which is slightly above the industry average of 2.41% and easily tops the S&P 500’s 1.6% average. Trading around $147 per share, the average Zacks Price Target suggests 4% upside for PG stock.
Another Consumers Staples stock investors may want to consider is Colgate-Palmolive which is set to report Q4 earnings on January 27. The iconic toothpaste and oral care provider could post a solid earnings beat on its bottom line.
The Zacks consensus for Colgate’s fourth-quarter earnings is $0.76 per share with the Most Accurate Estimate at $0.78 a share, implying an Expected Surprise Prediction (ESP) of 2.13%. This could get Colgate’s stock rallying if the company can significantly top estimates and perhaps offer stronger than expected guidance.
Image Source: Zacks Investment Research
Colgate earnings are now expected to dip -7% to round out its current fiscal 2022 but then rebound 6% in FY23 at $3.16 per share. Earnings estimates have slightly trended down over the last 90 days.
On the top line, Q4 sales are expected to be up 3% at $4.54 billion. Year over year, sales are now expected to be up 2% for FY22 and rise another 3% in FY23 at $18.44 billion. With 2019 sales at $15.69 billion, FY23 would be a 17% increase from pre-pandemic levels.
Image Source: Zacks Investment Research
With shares trading at $77 and only 9% from their highs, Colgate’s dividend also sticks out. Colgate’s 2.40% annual yield is on par with the industry average and nicely above the benchmark. For now, Colgate’s stock lands a Zacks Rank #3 (Hold) with the average Zacks Price Target still suggesting 4% upside from current levels.
Lastly, set to report fiscal Q2 earnings on February 2, The Zacks Consensus for Clorox stock is $0.65 a share with the Most Accurate Estimate at $0.68 per share. This gives CLX stock a 4.22% Earnings ESP leading up to its fiscal second-quarter report.
Image Source: Zacks Investment Research
Clorox’s fiscal 2023 earnings are expected to be virtually flat YoY at $4.11 per share. However, Fiscal 2024 earnings are projected to climb 30% to $5.34 a share. Earnings estimate revisions are higher for both FY23 and FY24 over the last quarter.
Second quarter sales are expected to decline -2% at $1.66 billion. Year over year, Clorox’s sales are expected to be down -1% in FY23 but rise 3% in FY24 at $7.30 billion. Fiscal 2024 would be a 17% increase from pre-pandemic levels which is significant as consumption among Clorox’s bleach and cleaning products received a huge boost from Covid-19 but had begun to slow.
Also supporting Clorox’s growth concerns is its PEG ratio of 2.6, which is getting closer to the optimum level of less than 1. While Clorox’s PEG is higher than the S&P 500’s 1.6, it is well below the industry average of 4.1. Clorox’s PEG is 50% below its decade-long high of 5.6 and 20% beneath the median of 3.3, further supporting the stock’s valuation from a historical growth rate perspective.
Image Source: Zacks Investment Research
Trading around $144 a share, Clorox stock lands a Zacks Rank #3 (Hold) and offers a generous 3.19% annual dividend yield which is well above the industry average of 2.41% and the benchmark’s 1.6%.
Bottom Line
These Consumer Staples stocks are starting to stand out leading up to their earnings report. The possibility of an earnings beat could lead to rallies among these equities and more importantly, show signs of a strengthening consumer and broader economy.
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Time to Buy These Consumer Staples Stocks Before Earnings?
As we progress through earnings season, investors may want to pay attention to the Consumer Staples sector as there are quite a few stocks that could beat earnings expectations.
The combination of a bottom-line earnings beat with better-than-expected guidance can be a strong catalyst in the upward price movement of a stock. Here are three Consumer Staples stocks that could be geared to beat expectations and see their stocks rise with better-than-expected quarterly reports.
Procter & Gamble (PG - Free Report)
Starting the list and set to report its second-quarter fiscal 2023 earnings on January 19 is Procter & Gamble. Landing a Zacks Rank #3 (Hold) Proctor & Gamble is expected to see solid annual top and bottom-line growth.
Proctor & Gamble’s three segments include products for Beauty, Grooming, and Health Care. Earnings estimates for the current quarter have started to trend higher over the last week leading up to the report at $1.58 per share.
Image Source: Zacks Investment Research
Year over year, PG’s earnings are expected to be virtually flat in fiscal 2023 but pop 7% in FY24 at $6.24 per share. Fiscal 2023 earnings estimates have remained unchanged and started to trend higher again for FY24. On the top line, sales are projected to be down -1% for Q2 at $20.61 billion. Annual sales are forecasted to be flat in FY23 but rise 4% in FY24 to $82.91 billion.
More importantly, FY24 would represent 22% growth from pre-pandemic levels which is impressive for a mature company of Proctor & Gambles’ size.
Image Source: Zacks Investment Research
Proctor and Gamble stock is down -9% over the last year compared to the S&P 500’s -14%. This has mostly been on par with the Zacks Soap & Cleaning Preparations Markets -6%. Even better, when including its dividend, PG’s total return over the last five years is +84% to easily beat the benchmark’s +56% and its Zack Subindustry’s +39%.
Image Source: Zacks Investment Research
In regard to PG’s dividend, the annual yield is 2.43% which is slightly above the industry average of 2.41% and easily tops the S&P 500’s 1.6% average. Trading around $147 per share, the average Zacks Price Target suggests 4% upside for PG stock.
Colgate-Palmolive (CL - Free Report)
Another Consumers Staples stock investors may want to consider is Colgate-Palmolive which is set to report Q4 earnings on January 27. The iconic toothpaste and oral care provider could post a solid earnings beat on its bottom line.
The Zacks consensus for Colgate’s fourth-quarter earnings is $0.76 per share with the Most Accurate Estimate at $0.78 a share, implying an Expected Surprise Prediction (ESP) of 2.13%. This could get Colgate’s stock rallying if the company can significantly top estimates and perhaps offer stronger than expected guidance.
Image Source: Zacks Investment Research
Colgate earnings are now expected to dip -7% to round out its current fiscal 2022 but then rebound 6% in FY23 at $3.16 per share. Earnings estimates have slightly trended down over the last 90 days.
On the top line, Q4 sales are expected to be up 3% at $4.54 billion. Year over year, sales are now expected to be up 2% for FY22 and rise another 3% in FY23 at $18.44 billion. With 2019 sales at $15.69 billion, FY23 would be a 17% increase from pre-pandemic levels.
Image Source: Zacks Investment Research
With shares trading at $77 and only 9% from their highs, Colgate’s dividend also sticks out. Colgate’s 2.40% annual yield is on par with the industry average and nicely above the benchmark. For now, Colgate’s stock lands a Zacks Rank #3 (Hold) with the average Zacks Price Target still suggesting 4% upside from current levels.
Clorox (CLX - Free Report)
Lastly, set to report fiscal Q2 earnings on February 2, The Zacks Consensus for Clorox stock is $0.65 a share with the Most Accurate Estimate at $0.68 per share. This gives CLX stock a 4.22% Earnings ESP leading up to its fiscal second-quarter report.
Image Source: Zacks Investment Research
Clorox’s fiscal 2023 earnings are expected to be virtually flat YoY at $4.11 per share. However, Fiscal 2024 earnings are projected to climb 30% to $5.34 a share. Earnings estimate revisions are higher for both FY23 and FY24 over the last quarter.
Second quarter sales are expected to decline -2% at $1.66 billion. Year over year, Clorox’s sales are expected to be down -1% in FY23 but rise 3% in FY24 at $7.30 billion. Fiscal 2024 would be a 17% increase from pre-pandemic levels which is significant as consumption among Clorox’s bleach and cleaning products received a huge boost from Covid-19 but had begun to slow.
Also supporting Clorox’s growth concerns is its PEG ratio of 2.6, which is getting closer to the optimum level of less than 1. While Clorox’s PEG is higher than the S&P 500’s 1.6, it is well below the industry average of 4.1. Clorox’s PEG is 50% below its decade-long high of 5.6 and 20% beneath the median of 3.3, further supporting the stock’s valuation from a historical growth rate perspective.
Image Source: Zacks Investment Research
Trading around $144 a share, Clorox stock lands a Zacks Rank #3 (Hold) and offers a generous 3.19% annual dividend yield which is well above the industry average of 2.41% and the benchmark’s 1.6%.
Bottom Line
These Consumer Staples stocks are starting to stand out leading up to their earnings report. The possibility of an earnings beat could lead to rallies among these equities and more importantly, show signs of a strengthening consumer and broader economy.