Church & Dwight (CHD) Q1 Earnings: A Beat In The Cards?
Zacks Investment Research | Apr 29, 2016 03:41AM ET
Church & Dwight Co. Inc. (NYSE:CHD) is slated to report first-quarter 2016 results on May 5, before the opening bell. In the last quarter, the company reported in-line earnings. Notably, the company surpassed the Zacks Consensus Estimate in three of the last four quarters, with an average earnings surprise of 2%. Let’s see how things are shaping up for this announcement.
Likely Earnings Beat in the Cards
Our proven model shows that Church & Dwight is likely to beat earnings estimates this quarter earnings because it has the perfect combination of two key ingredients.
Zacks ESP: Earnings ESP , which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, stands at +1.19%. This is because the Most Accurate estimate is of 85 cents, while the Zacks Consensus Estimate is pegged at 84 cents.
Zacks Rank: Church & Dwight currently has a Zacks Rank #2 (Buy). Note that stocks with Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) have a significantly higher chance of beating earnings estimates.
We caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Factors Affecting This Quarter
Despite expectations of intense competition and currency headwinds, Church & Dwight remains optimistic about its 2016 performance. The company’s robust portfolio of value and premium products, launch of innovative products, aggressive productivity programs and tight management of overhead expenses should bode well for its earnings and revenues.
As projected earlier, Church & Dwight’s estimates year-over-year organic sales growth of 2%–3% as well as improvement in gross margin in the first quarter. Adjusted earnings for the quarter are expected to be approximately 85 cents per share, up 6% year over year.
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:
Urban Outfitters Inc. (NASDAQ:URBN) has an Earnings ESP of +4.0% and a Zacks Rank #2 (Buy).
Central Garden & Pet Co. (NASDAQ:CENT) has an Earnings ESP of +3.39% and a Zacks Rank #2 (Buy).
The Home Depot, Inc. (NYSE:HD) has an Earnings ESP of +1.50% and a Zacks Rank #3.
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