Will Energizer (ENR) Pull Off A Surprise In Q3 Earnings?

Energizer Holdings, Inc. (NYSE:ENR) is set to report third-quarter fiscal 2016 results on Aug 3. Last quarter, it posted a positive earnings surprise of 42.86%. It has delivered an average positive earnings surprise of 33.23% over the trailing four quarters. Let's see how things are shaping up for this announcement.

Factors to Consider

Since the beginning of this fiscal year, Energizer Holdings has been reporting its operational results under the Household Product Division (comprising battery business) while the rest of the consumer brands business has been included in the operations of Edgewell Personal Care Co. (NYSE:EPC) .

Driven by the encouraging second-quarter results, the company raised its view for fiscal 2016, even though the to-be-reported quarter will see difficult comparisons. Though the company expected inventory to get considerably reduced in the second quarter of 2016, it hasn’t materialized. So the company expects revenues to face tougher comparison for the rest of the year as inventory levels return to “more normalised level”. Also, unfavorable foreign exchange, increasing competition and deconsolidation of Venezuelan operations remain concerns.

Earnings Whispers

Our proven model does not conclusively show that Energizer will beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP: Energizer currently has a 0.00% ESP because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 29 cents.

Zacks Rank: Energizer has a Zacks Rank #3, which when combined with a 0.00% ESP, makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Stocks to Consider

Here are some stocks that, as per our model, have the right combination of elements to post an earnings beat this quarter:

CDK Global, Inc (NASDAQ:CDK) with an Earnings ESP of +4.26% and a Zacks Rank #1

GoDaddy Inc. (NYSE:GDDY) with an Earnings ESP of +50.00% and a Zacks Rank #3.