Colgate-Palmolive Co. (CL), a global dealer in consumer goods, is scheduled to report its fourth-quarter fiscal 2014 results on Jan 29. Last quarter, this global dealer in consumer goods posted an earnings surprise of 1.33%. Let's see how things are shaping up for this announcement.
Factors Affecting the Upcoming Quarter
Colgate posted in-line earnings results through the first half of fiscal 2014, while it managed to beat earnings in the third quarter. However, the company’s top line missed estimates in the first three quarters of fiscal 2014. Nevertheless, the company’s bottom line is benefiting from cost saving initiatives under its funding-the-growth and 2012 Restructuring Program as well as higher pricing.
On the other hand, the company’s sales results continue to suffer due to the negative impact of currency fluctuations. Moreover, the company continues to be affected by higher raw material prices and Packaging costs, which are slightly weighing on its margins.
Given the aforementioned factors, we believe the company’s sales results for the upcoming quarter will reflect similar trends as witnessed in the first nine months of fiscal 2014. Thus, we are not very optimistic about the fourth-quarter results.
Earnings Whispers?
Our proven model does not conclusively project Colgate as likely to beat earnings this quarter. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 to surpass earnings estimates. However, this is not the case here due to the following factors:
Negative Zacks ESP: ESP for Colgate is -1.33%. This is because the Most Accurate estimate stands at 74 cents, while the Zacks Consensus Estimate is pegged at 75 cents.
Zacks Rank #4 (Sell): Colgate’s Zacks Rank #4 when combined with a negative ESP makes surprise prediction unlikely. We caution against stocks with a Zacks Ranks #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 other companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat:
Bebe Stores Inc. (BEBE) has an Earnings ESP of +50.00% and a Zacks Rank #1 (Strong Buy).
Chipotle Mexican Grill Inc. (CMG) has an Earnings ESP of +3.18% and a Zacks Rank #2.
Archer Daniels Midland Company (ADM) has an Earnings ESP of +5.50% and a Zacks Rank #3 (Hold).
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