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Clorox (CLX) Q3 Earnings: What's in the Cards for the Stock?

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The Clorox Company (CLX - Free Report) is scheduled to release third-quarter fiscal 2017 results on May 3. The big question facing investors is whether this consumer products company will be able to deliver a positive earnings surprise in the quarter to be reported.

Clorox delivered a positive earnings surprise in the last reported quarter, and has outperformed the Zacks Consensus Estimate by an average of 1.8% in the trailing four quarters. The Zacks Consensus Estimate for the third-quarter has witnessed an uptrend, while for fiscal 2017 it has declined over the last 30 days. Nonetheless, the current Zacks Consensus Estimate of $1.30 per share for the third quarter reflects a year-over-year increase of 7.3%. Further, analysts polled by Zacks expect revenues of $1.5 billion, up 3.7% from the year-ago quarter.

Clorox Company (The) Price and EPS Surprise


Clorox Company (The) Price and EPS Surprise | Clorox Company (The) Quote

Factors Influencing this Quarter

Shares of Clorox increased 14.7% in the last six months, outperforming the Zacks categorized Soap & Cleaning Materials industry’s growth of 8%.

The company remains keen on the smooth execution of its 2020 Strategy, which is aimed at boosting growth and overall market share, and has been helping the company to achieve cost savings and productivity enhancements. Also, Clorox remains focused on improving demand for its products by improving brand value through innovations and stepping up digital marketing. These factors helped the company to deliver robust results in the last reported quarter. Further, management remains confident of sustaining this solid momentum, based on its core business plans, which had encouraged it to raise the lower end of its fiscal 2017 sales outlook.

However, the company trimmed its fiscal 2017 earnings forecast owing to lower expected benefits from the recently adopted accounting standards. Moreover, the company has been battling foreign currency headwinds for a while now. The adverse currency fluctuations are also expected to linger and hurt results in fiscal 2017. Thus, we prefer to wait and see if Clorox can counter these obstacles with its solid growth strategies this time.

Earnings Whispers

Our proven model does not conclusively show that Clorox is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here, as you will see below:

Zacks ESP: Clorox currently has an Earnings ESP of -1.54%. This is because the Most Accurate estimate of $1.28 is pegged lower than the Zacks Consensus Estimate of $1.30. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Clorox’s Zacks Rank #3 increases the predictive power of ESP. However, the company’s negative ESP makes surprise prediction difficult.

We caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

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:

Adidas AG (ADDYY - Free Report) , scheduled to release earnings on May 4, currently has an Earnings ESP of +0.94% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

McDonald's Corporation (MCD - Free Report) , expected to report earnings on Apr 28, currently has an Earnings ESP of +2.27% and a Zacks Rank #3.

Red Robin Gourmet Burgers, Inc. (RRGB - Free Report) , expected to release earnings on May 16, currently has an Earnings ESP of +17.24% and a Zacks Rank #3.

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