The Clorox Company CLX is slated to report fourth-quarter fiscal 2015 results on Aug 3, before the opening bell. In the last quarter, the company delivered a negative earnings surprise of 1.8%. Let’s see how things are shaping up for this announcement.
Factors Influencing this Quarter
Clorox has outperformed the Zacks Consensus Estimate by an average of 4.3% over the past four quarters, mainly benefiting from product innovations and improved pricing. Further, management’s confidence in the strategy of achieving growth via its cost-savings plan and efficient pricing inspires optimism about the company’s upcoming results.
Though management expects currency headwinds and slowing global economies to weigh on Clorox’s results, it raised its sales and earnings guidance for the fiscal year. The company expects fiscal 2015 sales to increase in a range of 1–2%, compared with a 1% rise projected earlier. This guidance includes a negative impact of over 2% from currency headwinds.
Further, the company raised its fiscal 2015 earnings forecast to $4.45–$4.55 per share from $4.40–$4.55 expected earlier.
Earnings Whispers
Our proven model does not conclusively show that Clorox is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below:
Zacks ESP: Earnings ESP for Clorox is currently pegged at 0.00%. This is because the Most Accurate estimate and the Zacks Consensus Estimate both stand at $1.36.
Zacks Rank: Clorox carries a Zacks Rank #2 (Buy), which increases the predictive power of ESP. However, the company’s ESP of 0.00% makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks that Warrant a Look
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 this quarter:
DSW Inc. DSW has an Earnings ESP of +2.38% and a Zacks Rank #2.
Dollar Tree Inc. DLTR has an Earnings ESP of +2.94% and a Zacks Rank #3 (Hold).
Coach, Inc. COH has an Earnings ESP of +3.45% and a Zacks Rank #3.
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