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Consumer Staples Stock Earnings on Jul 20: PM and SCHL

Per the latest Earnings Preview as of Jul 15, only 30 of the S&P 500 members have reported Q2 results, accounting for 9.3% of the total index’s market capitalization. We are in the early phase of the season and the available results indicate an improvement from the previous year. Total earnings of the reported companies have increased 13.8% from the year-ago period, while earnings went up 6%. Remarkably, 83.3% of these companies have beaten earnings and revenue estimates. As a whole, earnings for the S&P 500 companies are anticipated to improve 6.6% alongside revenues, which saw an increase of 4.5%.

Out of the 16 Zacks Classified sectors, five are expected to witness a decline in earnings this season wherein Conglomerates and Autos are likely to prove as major drags. Meanwhile, the Consumer Staples sector has been performing well and is placed at the top 13% of the Zacks Classified sectors (2 out of 16). The sector is displaying strength with earnings expected to advance 4% and revenues to grow by 1.5% in the second quarter.

The consumer staples sector has been performing well of late buoyed by rising consumer confidence and improving economy. Strong recovery in the housing market and an improving labor market played a crucial role in boosting buyers’ confidence. Encouraging manufacturing index readings issued by the Institute of Supply Management (ISM) also hints at a pickup in GDP, indicating that economy is in good shape currently.

Bearing these factors in mind, let’s see what awaits the following consumer staples stocks when they release results on Jul 20.

Philip Morris International Inc. PM, a leading manufacturer and seller of cigarettes and other tobacco products, is slated to report second-quarter 2017 results before the opening bell. The company has an Earnings ESP of -1.63% as the Most Accurate estimate of $1.21 is below the Zacks Consensus Estimate of $1.23. The company’s earnings lagged estimates in three of the trailing four quarters, with an average miss of 2.3%. The company carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Our proven model does not conclusively show an earnings beat for Philip Morris in this quarter. This is because a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) for this to happen. Although the company’s Zacks Rank #2 increases the predictive power of ESP, we need a positive Earnings ESP in order to be confident about an earnings surprise. You may uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Philip Morris International Inc Price, Consensus and EPS Surprise


Philip Morris has been witnessing a decline in demand for cigarettes due to the ongoing anti-tobacco campaigns, government restrictions and rising taxes. Serious health hazards due to cigarette smoking have pushed consumers toward low-risk or reduced risk products. Thus, Philip Morris is aggressively investing in creating smoke-free products such as IQOS (Heatsticks that heat tobacco instead of burning it) in order to boost its business and market share. Meanwhile, the company continues to benefit from its strong portfolio of tobacco brands and maintains its position by generating revenues through higher cigarette pricing. (Read more: What's in Store for Philip Morris this Earnings Season?).

Another consumer staples stock, Scholastic Corporation SCHL, is scheduled to report its fourth quarter and fiscal 2017 earnings, before the market opens. The company has an Earnings ESP of 0.00% as both the Zacks Consensus Estimate and the Most Accurate estimate are pegged at $1.09. The company has a Zacks Rank #3. For the trailing four quarters, the company has an average negative earnings surprise of 2.6%. Estimates for the fourth quarter and fiscal 2017 have remained stable over the past 30 days.

Scholastic Corporation Price, Consensus and EPS Surprise


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