What The Buy Side Expects From Procter & Gamble

| About: The Procter (PG)

Procter & Gamble Co. (NYSE:PG) is set to report FQ2 2014 earnings before the market opens on Friday, January 24. Procter & Gamble is an American multinational consumer goods company known for brands such as Tide, Gillette, Duracell, Crest, Pantene and more. FQ2 is typically the best quarter of the year for PG and this quarter analysts are expecting Procter & Gamble to report year over growth in both profit and revenue. Procter & Gamble has met or exceeded the Wall Street profit consensus in each of the past six quarters and analysts are expecting the company to beat the Street again this quarter.

The information below is derived from data submitted to the Estimize.com platform by a set of Buy Side and Independent analyst contributors

(Click Here to see All Estimates for Procter and Gamble)

The current Wall Street consensus expectation is for Procter & Gamble to report $1.20 EPS and $22.342B revenue while the current Estimize.com consensus from 13 Buy Side and Independent contributing analysts is $1.23 EPS and $22.412B revenue. This quarter the buy-side as represented by the Estimize.com community is expecting Procter & Gamble to beat the Wall Street consensus on both profit and revenue.

The magnitude of the difference between the Wall Street and Estimize consensus numbers often identifies opportunities to take advantage of expectations that may not have been priced into the market. In this case we are seeing a large difference between the two groups' forecasts.

Over the previous six quarters the Estimize.com consensus has been more accurate than Wall Street in predicting PG's EPS and revenue 5 and 3 times respectively. By tapping into a wider range of contributors including hedge-fund analysts, asset managers, independent research shops, students and non-professional investors Estimize has created a data set that is up to 69.5% more accurate than Wall Street, but more importantly it does a better job of representing the market's actual expectations. It has been confirmed by an independent academic study from Rice University that stock prices tend to react with a more strongly associated degree to the expectation benchmark from Estimize than from the Wall Street consensus.

The distribution of estimates published by analysts on Estimize range from $1.20 to $1.26 EPS and $22.370B to $22.516B in revenues. This quarter we're seeing a moderate distribution of estimates compared to previous quarters.

The size of the distribution of estimates relative to previous quarters often signals whether or not the market is confident that it has priced in the expected earnings already. A larger distribution of estimates signaling the potential for greater volatility post earnings, or smaller vice versa.

This quarter the Wall Street profit consensus fell from $1.24 to $1.20 EPS while the revenue forecast increased from $22.321B to $22.342B. Meanwhile the Estimize EPS consensus opened the period at $1.24 and slipped to $1.23 while the Estimize revenue consensus increased going into the report from $22.404B to $22.412B. Timeliness is correlated with accuracy, and an increase in the community consensus going into the report is often a bullish indicator.

The analyst with the highest estimate confidence rating this quarter is TheEmulator23 who projects $1.64 EPS and $1.705B in revenue. In the Winter 2014 season, TheEmulator23 is currently ranked as the 16th best analyst and is ranked 25th overall among over 3,500 contributing analysts. Estimate confidence ratings are calculated through algorithms developed by deep quantitative research which looks at correlations between analyst track records and tendencies as they relate to future accuracy. In this case the highest rated analyst agrees with the Estimize community that Procter & Gamble will beat the Street on both profit and revenue, however, TheEmulator23 has lower revenue expectations than the Estimize consensus.

Disclosure: None.