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Can Robust Strategies Fuel Clorox's (CLX) Q2 Earnings?
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The Clorox Company (CLX - Free Report) is scheduled to report its second-quarter fiscal 2018 results on Feb 2, before the market opens. Last quarter, the company delivered a positive earnings surprise of 3.5%.
Notably, the company has delivered positive earnings surprise for four trailing quarters, with an average beat of 2.4%.
The question lingering in the investors minds’ is that whether this consumer products company will be able to deliver a positive earnings surprise in the quarter to be reported. The Zacks Consensus Estimate for the quarter under review is pegged at $1.22, reflecting a decline of 2.4% year over year. Earnings estimate for the current quarter has been stable in the last 30 days. Moreover, analysts polled by Zacks expect revenues of $1.43 billion were up about 1.7% from the year-ago quarter.
The company’s shares have rallied 13.8% in the past three months, outperforming the industry’s growth of 3%, mainly driven by its 2020 strategy.
Factors at Play
Clorox is well on track with its 2020 strategy, which is aimed at bolstering growth for the improvement of categories and overall market share. The strategy is meant to be achieved through key accelerators like investment in brands, development of e-commerce, technological advancements, enhancement of growth culture and focus on the 3Ds - desire, decision and delight.
Furthermore, the company’s potential is quite visible in its robust outlook, diversified brand portfolio and disciplined capital strategy. In fact, its solid brand portfolio places Clorox well in the challenging environment.
Meanwhile, Clorox remains committed toward brand management and improvement in margins through cost saving and productivity initiatives. Also, the company’s Go Lean strategy remains focused on improving margins through operational efficiencies. These strategies are likely to aid in catering to the near-term challenges.
However, management has trimmed its guidance for fiscal 2018 due to the Aplicare business divestiture and increase in costs related to the recent hurricanes. It now anticipates sales growth in the 1-3% range as the Aplicare sale is estimated to reduce fiscal-year sales by slightly less than one point. Further, gross margin is projected to be slightly down due to significant cost pressures related to the recent hurricanes. Hurricanes are also likely to impact earnings per share by nearly 10 cents, leading the company to lower EPS view to $5.47-$5.67 per share.
What the Zacks Model Unveils?
Our proven model does not conclusively show that Clorox is likely to beat earnings 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. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Clorox has an Earnings ESP of -0.07%. While the company’s Zacks Rank #3 increases the predictive power of ESP, we need to have a positive ESP to be confident about an earnings surprise.
Other Stocks with Favorable Combination
Here are some other companies you may want to consider as our model shows that these also have the right combination of elements to post an earnings beat:
Tractor Supply Company Inc. (TSCO - Free Report) has an Earnings ESP of +0.92% and a Zacks Rank #2.
Post Holdings Inc. (POST - Free Report) has an Earnings ESP of +2.44% and a Zacks Rank #3.
Zacks Top 10 Stocks for 2018
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2018?
Last year's 2017 Zacks Top 10 Stocks portfolio produced double-digit winners, including FMC Corp. and VMware which racked up stellar gains of +67.9% and +61%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
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Can Robust Strategies Fuel Clorox's (CLX) Q2 Earnings?
The Clorox Company (CLX - Free Report) is scheduled to report its second-quarter fiscal 2018 results on Feb 2, before the market opens. Last quarter, the company delivered a positive earnings surprise of 3.5%.
Notably, the company has delivered positive earnings surprise for four trailing quarters, with an average beat of 2.4%.
Clorox Company (The) Price and Consensus
Clorox Company (The) Price and Consensus | Clorox Company (The) Quote
What to Expect?
The question lingering in the investors minds’ is that whether this consumer products company will be able to deliver a positive earnings surprise in the quarter to be reported. The Zacks Consensus Estimate for the quarter under review is pegged at $1.22, reflecting a decline of 2.4% year over year. Earnings estimate for the current quarter has been stable in the last 30 days. Moreover, analysts polled by Zacks expect revenues of $1.43 billion were up about 1.7% from the year-ago quarter.
The company’s shares have rallied 13.8% in the past three months, outperforming the industry’s growth of 3%, mainly driven by its 2020 strategy.
Factors at Play
Clorox is well on track with its 2020 strategy, which is aimed at bolstering growth for the improvement of categories and overall market share. The strategy is meant to be achieved through key accelerators like investment in brands, development of e-commerce, technological advancements, enhancement of growth culture and focus on the 3Ds - desire, decision and delight.
Furthermore, the company’s potential is quite visible in its robust outlook, diversified brand portfolio and disciplined capital strategy. In fact, its solid brand portfolio places Clorox well in the challenging environment.
Meanwhile, Clorox remains committed toward brand management and improvement in margins through cost saving and productivity initiatives. Also, the company’s Go Lean strategy remains focused on improving margins through operational efficiencies. These strategies are likely to aid in catering to the near-term challenges.
However, management has trimmed its guidance for fiscal 2018 due to the Aplicare business divestiture and increase in costs related to the recent hurricanes. It now anticipates sales growth in the 1-3% range as the Aplicare sale is estimated to reduce fiscal-year sales by slightly less than one point. Further, gross margin is projected to be slightly down due to significant cost pressures related to the recent hurricanes. Hurricanes are also likely to impact earnings per share by nearly 10 cents, leading the company to lower EPS view to $5.47-$5.67 per share.
What the Zacks Model Unveils?
Our proven model does not conclusively show that Clorox is likely to beat earnings 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. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Clorox has an Earnings ESP of -0.07%. While the company’s Zacks Rank #3 increases the predictive power of ESP, we need to have a positive ESP to be confident about an earnings surprise.
Other Stocks with Favorable Combination
Here are some other companies you may want to consider as our model shows that these also have the right combination of elements to post an earnings beat:
AutoNation Inc. (AN - Free Report) has an Earnings ESP of +1.93% and a Zacks Rank #1.You can see the complete list of today’s Zacks #1 Rank stocks here.
Tractor Supply Company Inc. (TSCO - Free Report) has an Earnings ESP of +0.92% and a Zacks Rank #2.
Post Holdings Inc. (POST - Free Report) has an Earnings ESP of +2.44% and a Zacks Rank #3.
Zacks Top 10 Stocks for 2018
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2018?
Last year's 2017 Zacks Top 10 Stocks portfolio produced double-digit winners, including FMC Corp. and VMware which racked up stellar gains of +67.9% and +61%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2018 today >>