As the earnings season unfolds, the prospects of the Consumer Staples sector look mixed. While companies with a strong brand position, diversified portfolios and effective cost management are poised to shine, others may find it difficult to maintain momentum amid volatile consumption trends and cost concerns. 

Known for its defensive characteristics and essential product offerings, the Consumer Staples sector comprises a wide array of companies, including household goods, food and beverage manufacturers, and personal care product providers. Though the industry, in general, enjoys a degree of insulation from broader economic disruptions, the current landscape reflects a rather delicate picture.

Key Trends to Watch Out for This Season

While moderating, inflationary pressures continue to influence consumer spending behaviors. Consumers are becoming increasingly cost-conscious, causing them to switch to private labels or reduce discretionary purchases, creating headwinds for premium and branded products. While many companies in the sector have implemented price increases to offset these impacts, the interplay between pricing actions and volume performance will remain a key focus of this earnings cycle. 

Supply-chain normalization and easing commodity prices have provided some relief, though elevated costs remain a concern. Companies with strong procurement strategies and cost management are likely to perform well, while those grappling with persistent inefficiencies may face margin pressure. 

The rising demand for health-conscious products is fueling growth across multiple categories, including natural foods, low-sugar beverages and plant-based alternatives. Staying in line with the evolving consumer trends is expected to play a critical role in shaping the fate of consumer staples players. Companies that are successfully innovating in health-conscious, plant-based or premium categories could provide a bright spot in an otherwise cautious outlook. Also, those investing in digital transformation, enhancing e-commerce capabilities and direct-to-consumer channels look well positioned for the season. 

All said, let’s take a look at a few companies from the Zacks Consumer Staples sector that are likely to post an earnings beat in this reporting cycle.

How to Make the Right Choice?

Amid the vast array of companies, selecting an ideal stock may seem daunting. Although pinpointing clear outperformers with certainty is difficult, our proprietary methodology makes the process somewhat easier.

Our research shows that for stocks with the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), the chance of an earnings surprise is as high as 70%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Per the latest Zacks Earnings Preview, the Consumer Staples sector is likely to witness a revenue increase of 0.7%, whereas the bottom line is expected to dip 0.1% this earnings season.

4 Staple Bets Likely to Deliver Earnings Beat

Kimberly-Clark Corporation KMB currently has an Earnings ESP of +0.27% and a Zacks Rank #3.  The consumer products company is slated to report fourth-quarter 2024 results on Jan. 28. The company’s Powering Care Strategy keeps it well-positioned, keeping it focused on three main areas. These include accelerating innovation, optimizing margin structure and restructuring for growth. KMB’s transition to a volume-and-mix-led growth strategy has also been yielding results.  You can see the complete list of today’s Zacks #1 Rank stocks here.

By prioritizing consumer demand and focusing on premium products, the company is effectively balancing top-line growth with margin protection. This approach has positioned Kimberly-Clark favorably within its categories, helping it outperform category averages and support sustained organic growth. These upsides are likely to have supported the company amid a dynamic consumer landscape and elevated promotional costs. KMB has a trailing four-quarter earnings surprise of 12.1%, on average.

Church & Dwight Co., Inc. CHD also deserves mention. The stock has an Earnings ESP of +0.11% and a Zacks Rank #3. The company has a trailing four-quarter earnings surprise of around 10%, on average. Church & Dwight’s strong brand equity, bolstered by regular innovation and prudent acquisitions, helps it maintain its solid market position and drive growth. The company has also been benefiting from its strong pricing power.

Online sales have emerged as a critical growth area for Church & Dwight, accounting for 20.7% of global sales as of the third-quarter 2024 earnings release.  The company’s focus on expanding its direct-to-consumer platforms and optimizing its omnichannel presence has also been yielding positive results. These upsides bode well for the company amid challenges tied to shifting consumer spending patterns in the current economic environment. CHD is set to report fourth-quarter 2024 results on Jan. 31. 

The Clorox Company CLX, with an Earnings ESP of +0.06% and a Zacks Rank #3, is worth a look. The consumer and professional products company looks well-poised for the upcoming release, thanks to its robust growth strategies. Clorox has been benefiting from its IGNITE strategy, which mainly focuses on the expansion of the key elements under the 2020 Strategy to pace up innovation across each area of business.

Clorox has been on track with its streamlined operating model to improve efficiency. The company’s pricing and cost-saving initiatives aided it in delivering the eighth consecutive quarter of gross margin expansion in the first quarter of fiscal 2025, also giving positive signals for the quarter to be reported. CLX has a trailing four-quarter earnings surprise of 45.9%, on average. The company is likely to report second-quarter fiscal 2025 results on Feb. 3.

Kenvue Inc. KVUE is scheduled to report fourth-quarter 2024 results on Feb. 6. The company currently has an Earnings ESP of +3.23% and a Zacks Rank #3. With a portfolio of iconic consumer health brands, Kenvue is expected to demonstrate its resilience in the face of macroeconomic pressures and evolving consumer dynamics. The company’s commitment to product innovation and marketing spend has been strengthening its position. Key product launches, such as Tylenol Easy to Swallow and BAND-AID PRO HEAL, have gained traction, while strategic partnerships with influencers and dermatologists are expanding brand visibility.

Kenvue’s new operational framework, referred to as the “Kenvue playbook,” has already begun to show signs of progress. The company’s cost-saving initiatives under the "Our Vue Forward" program are anticipated to have contributed to margin expansion. KVUE has a trailing four-quarter earnings surprise of 10.2%, on average.

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