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CHD, CLX Earnings on Aug 2: Here are the Key Predictions

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The earnings season is in full swing and the picture that has emanated so far is quite a healthy one. Per the Earnings Preview dated Jul 27, 265 of the S&P 500 members have reported results. Out of these S&P 500 companies that have reported their quarterly numbers, approximately 80.8% delivered positive earnings surprises, while 72.1% beat top-line expectations.

Further, earnings for these companies have advanced 23.6% from the same period last year, with revenues up 10.1%.

Further, the report suggests that earnings for the total S&P 500 companies for this quarter are projected to improve 23.6% year over year, with total revenues expected to advance 8.8%. Thus, the overall picture looks favorable for this reporting cycle.

The performance of the index is determined by all 16 Zacks sectors, out of which 14 are estimated to witness year-over-year earnings growth. Meanwhile, per the report, the Consumer Staples sector, which also houses major soap and cleaning material stocks, is likely to witness earnings growth of 8.1% and revenue increase of 3.7%, this earnings season.

The Zacks Soap and Cleaning Material Industry is currently ranked among the bottom 3% (249 of 256) of all Zacks Industries. The soap and cleaning material stocks are exposed to headwinds related to strained gross margins, owing to increased commodity and transport costs. Also, the players in the industry are facing intense competition and global economic challenges. To counter these hurdles, the industry players are focused on diversifying their brand portfolio mostly through innovation. Further, initiatives undertaken to enhance e-commerce growth bode well for various players in this space.

Driven by such efforts, the industry has outperformed both the S&P 500 and its own sector over the past three months. While stocks in this industry have collectively gained 10%, the Zacks S&P 500 Composite and Zacks Consumer Staples Sector have rallied 7.2% and 5.4%, respectively.

So, let’s see what awaits the following soap and cleaning material stocks that are queued up for the earnings releases on Aug 2.

Well our research shows that for stocks with the combination of a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP, the chance of a positive earnings surprise is high. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter .

Church & Dwight Co., Inc. (CHD - Free Report) , which is known for developing, manufacturing and marketing household, personal care, and specialty products, currently carries a Zacks Rank #3 and has an Earnings ESP of +0.06%, which makes us confident of a beat. The current Zacks Consensus Estimate for the quarter under review is pegged at 47 cents. You can see the complete list of today’s Zacks #1 Rank stocks here.

Church & Dwight Co., Inc. Price, Consensus and EPS Surprise

Church & Dwight is benefiting from its international business, which is driving its organic sales. Furthermore, the company is actively pursuing strategic acquisitions that have been boosting its revenues, which are expected to reach $4 billion in 2018.  The company is also opening new offices in order to support increase in export business and expects this business to remain strong. Driven by the aforementioned factors, the consensus mark for earnings in the to-be-reported quarter is currently pegged at 47 cents, reflecting an increase of 14.6% year over year. Further, the Zacks Consensus Estimate for sales of approximately $1 billion indicates a rise of almost 11.8% from the prior-year quarter’s tally.  

However, Church & Dwight is facing margin pressure from higher commodity and transportation expenses, alongside expecting unfavorable brand mix. (Read more: Will Church & Dwight Offset Cost Woes in Q2 Earnings?)

Moving on, The Clorox Company (CLX - Free Report) , which is slated to report fourth-quarter fiscal 2018 results, is involved in manufacturing and marketing consumer and professional products worldwide. While the company currently carries a Zacks Rank #3, our earnings beat criteria was let down by its Earnings ESP of -0.07%.

The Clorox Company Price, Consensus and EPS Surprise

Clorox is moving ahead with its long-term plans, given the smooth progress on its 2020 Strategy. It also remains committed to investing in product and brand differentiation to safeguard value proposition. Further, the company’s focus on strong investments in demand building, including digital marketing, e-commerce and product innovation pipeline, bode well. However, soft margin trend continued to be a headwind owing to elevated commodity and logistics expenses. (Read more: Will Clorox Beat Q4 Earnings Despite Margin Woes?)

Given these factors, along with expected gains from the tax reform, the Zacks Consensus Estimate for sales of $1.72 billion indicates a 4.2% year-over-year rise. Further, the consensus mark for earnings is pegged at $1.58, reflecting a 3.3% year-over-year growth.

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