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CLX, EL Q1 Earnings on Oct 31: Here are the Key Predictions
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The Clorox Company (CLX - Free Report) and The Estee Lauder Companies Inc. (EL - Free Report) come under the broader Consumer Staples sector. Notably, the sector comprises companies that provide daily products. It also includes a wide range of categories from agriculture operations to food and beverage companies, among others. Currently, an improving economy, marked by low unemployment levels, solid consumer spending and strong consumer confidence, is providing an impetus to this space.
In fact, the third-quarter earnings season looks quite favorable for this sector, particularly on the bottom-line front. Per the latest Earnings Preview, the Consumer Staples sector’s bottom line is expected to increase 5% year over year, while sales are likely to grow 1.1%. Also, margins for the space are projected to edge up 0.5% despite the companies’ higher operating expenses.
A glimpse of the sector’s performance reveals that nearly 27.6% of the S&P 500 companies in the sector have already reported quarterly numbers. Out of these, 75% delivered earnings beat, while 62.5% trumped sales estimates. Moreover, earnings and sales registered a year-over-year improvement of 5.9% and 1.8%, respectively. On a combined basis, 62.5% delivered both earnings and sales beat.
Clorox and Estee Lauder are slated to report first-quarter fiscal 2019 results tomorrow. Here is a brief analysis:
How CLX is Poised to Perform?
Clorox, which belongs to the Zacks Soap and Cleaning Materials industry, is gaining momentum backed by its 2020 Strategy, Go Lean Strategy, and enhancement of e-commerce business. Players in this industry are benefiting from product innovations and new brands, enabling them to capture higher market share. Also, these companies are resorting to price increases in a bid to offset elevated costs. However, higher expenses, including commodity and logistics, raw material, transportation and packaging costs are weighing on the companies’ margins.
Clorox’s 2020 strategy aims at boosting growth for the improvement of categories and overall market share. Its focus on making solid investments, including digital marketing, e-commerce and product innovation pipeline is also encouraging. These initiatives are expected to boost upcoming quarterly results. Notably, the Zacks Consensus Estimate for first-quarter fiscal 2019 earnings is pegged at $1.59, which moved north by a penny over the last 30 days and reflects growth of 8.9% year over year. Moreover, the consensus mark for revenues is $1,537 million, up 2.4% from the year-ago quarter number. (Read more: Can Clorox Retain its Earnings Beat Streak in Q1?)
However, the company continues to witness significant pressure on gross margin, which too remains a major concern in the impending quarter. This is quite evident from Clorox’s expectations of witnessing soft gross margin in the first half owing to increased commodity expenses. However, it predicts gross margin expansion in the second half of fiscal 2019.
According to the Zacks model, Clorox is unlikely to beat estimates in the fiscal first quarter. This is because our research shows that the combination of a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP 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.
The Clorox Company Price, Consensus and EPS Surprise
Estee Lauder, which falls under the Zacks Cosmetics industry, is expected to gain from its robust portfolio of well-established brands. In fact, companies in this industry are expected to continue benefiting from effective promotional and marketing strategies to resonate well with the evolving consumer trends. Also, the cosmetics space remains focused on innovations and new products. Impressively, industry players are gaining from higher demand for skincare and hair care products, and witnessing improved trends in makeup and fragrance businesses.
Estee Lauder’s solid travel retail business is expected to drive first-quarter fiscal 2019 results. Travel retail sales growth in the last reported quarter was mainly backed by double-digit growth in EMEA. Also, it has been working toward better customer insights, enhanced merchandising and improved digital marketing. Management expects continued growth in the travel retail channel, especially in China.
Estee Lauder is also poised to continue gaining from its Too Faced and BECCA buyouts. The investment in DECIEM, a fast-growing multi-brand company, is also likely to aid beauty sales. Additionally, Estee Lauder has a strong online business, which is likely to boost sales in the soon-to-reported quarter. Notably, the Zacks Consensus Estimate for revenues stands at $3,477 million, reflecting 6.2% growth from the year-ago figure. Management projects net sales growth of 5-6% for the first quarter. The consensus mark for quarterly earnings stands at $1.22, up from $1.21 reported in the year-ago period. Notably, estimates have been stable over the past 30 days. Adjusted EPS is envisioned in the band of $1.18-$1.22 for the quarter. On a constant curremcy basis, the bottom line is expected to improve 7-10%.
However, increased operating costs due to higher advertising and marketing investments might dent the company’s margins.
The Estee Lauder Companies Inc. Price, Consensus and EPS Surprise
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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CLX, EL Q1 Earnings on Oct 31: Here are the Key Predictions
The Clorox Company (CLX - Free Report) and The Estee Lauder Companies Inc. (EL - Free Report) come under the broader Consumer Staples sector. Notably, the sector comprises companies that provide daily products. It also includes a wide range of categories from agriculture operations to food and beverage companies, among others. Currently, an improving economy, marked by low unemployment levels, solid consumer spending and strong consumer confidence, is providing an impetus to this space.
In fact, the third-quarter earnings season looks quite favorable for this sector, particularly on the bottom-line front. Per the latest Earnings Preview, the Consumer Staples sector’s bottom line is expected to increase 5% year over year, while sales are likely to grow 1.1%. Also, margins for the space are projected to edge up 0.5% despite the companies’ higher operating expenses.
A glimpse of the sector’s performance reveals that nearly 27.6% of the S&P 500 companies in the sector have already reported quarterly numbers. Out of these, 75% delivered earnings beat, while 62.5% trumped sales estimates. Moreover, earnings and sales registered a year-over-year improvement of 5.9% and 1.8%, respectively. On a combined basis, 62.5% delivered both earnings and sales beat.
Clorox and Estee Lauder are slated to report first-quarter fiscal 2019 results tomorrow. Here is a brief analysis:
How CLX is Poised to Perform?
Clorox, which belongs to the Zacks Soap and Cleaning Materials industry, is gaining momentum backed by its 2020 Strategy, Go Lean Strategy, and enhancement of e-commerce business. Players in this industry are benefiting from product innovations and new brands, enabling them to capture higher market share. Also, these companies are resorting to price increases in a bid to offset elevated costs. However, higher expenses, including commodity and logistics, raw material, transportation and packaging costs are weighing on the companies’ margins.
Clorox’s 2020 strategy aims at boosting growth for the improvement of categories and overall market share. Its focus on making solid investments, including digital marketing, e-commerce and product innovation pipeline is also encouraging. These initiatives are expected to boost upcoming quarterly results. Notably, the Zacks Consensus Estimate for first-quarter fiscal 2019 earnings is pegged at $1.59, which moved north by a penny over the last 30 days and reflects growth of 8.9% year over year. Moreover, the consensus mark for revenues is $1,537 million, up 2.4% from the year-ago quarter number. (Read more: Can Clorox Retain its Earnings Beat Streak in Q1?)
However, the company continues to witness significant pressure on gross margin, which too remains a major concern in the impending quarter. This is quite evident from Clorox’s expectations of witnessing soft gross margin in the first half owing to increased commodity expenses. However, it predicts gross margin expansion in the second half of fiscal 2019.
According to the Zacks model, Clorox is unlikely to beat estimates in the fiscal first quarter. This is because our research shows that the combination of a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP 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.
The Clorox Company Price, Consensus and EPS Surprise
The Clorox Company Price, Consensus and EPS Surprise | The Clorox Company Quote
Clorox has an Earnings ESP of -0.99% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
What to Know About EL Prior to the Release?
Estee Lauder, which falls under the Zacks Cosmetics industry, is expected to gain from its robust portfolio of well-established brands. In fact, companies in this industry are expected to continue benefiting from effective promotional and marketing strategies to resonate well with the evolving consumer trends. Also, the cosmetics space remains focused on innovations and new products. Impressively, industry players are gaining from higher demand for skincare and hair care products, and witnessing improved trends in makeup and fragrance businesses.
Estee Lauder’s solid travel retail business is expected to drive first-quarter fiscal 2019 results. Travel retail sales growth in the last reported quarter was mainly backed by double-digit growth in EMEA. Also, it has been working toward better customer insights, enhanced merchandising and improved digital marketing. Management expects continued growth in the travel retail channel, especially in China.
Estee Lauder is also poised to continue gaining from its Too Faced and BECCA buyouts. The investment in DECIEM, a fast-growing multi-brand company, is also likely to aid beauty sales. Additionally, Estee Lauder has a strong online business, which is likely to boost sales in the soon-to-reported quarter. Notably, the Zacks Consensus Estimate for revenues stands at $3,477 million, reflecting 6.2% growth from the year-ago figure. Management projects net sales growth of 5-6% for the first quarter. The consensus mark for quarterly earnings stands at $1.22, up from $1.21 reported in the year-ago period. Notably, estimates have been stable over the past 30 days. Adjusted EPS is envisioned in the band of $1.18-$1.22 for the quarter. On a constant curremcy basis, the bottom line is expected to improve 7-10%.
However, increased operating costs due to higher advertising and marketing investments might dent the company’s margins.
The Estee Lauder Companies Inc. Price, Consensus and EPS Surprise
The Estee Lauder Companies Inc. Price, Consensus and EPS Surprise | The Estee Lauder Companies Inc. Quote
Estee Lauder has a Zacks Rank #3 and an Earnings ESP of +1.19%, which makes us reasonably confident of an earnings beat. (Read more: Estee Lauder Q1 Earnings: Travel Retail to Stay Strong?)
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>