P&G also confirmed that no other Pringles varieties or flavors were affected by this recall. These two products represent only 0.5% of Pringles’ U.S. volume. Management at PG also mentioned that the safety of its products is its top priority and the company follows rigorous food safety and ingredient testing standards.

Salmonella is a common food-related pathogen that can cause severe illnesses, including fever, abdominal cramps and diarrhea. The company was notified by one of its suppliers that a seasoning used in these two recalled products contained hydrolyzed vegetable protein or HVP, manufactured by Basic Food Flavours, Inc., which could lead to potential salmonella exposure.

Last week, McCormick (MKC), the manufacturer of spices, also issued a recall when salmonella was found in its equipment and was transferred to its product. MKC pulled packages of French onion dip mix, vegetable dip mix, onion gravy mix and corn stuffing mix; all of which contained hydrolyzed vegetable protein manufactured by Basic Food Flavours.

Zacks Investment Research

($PG) Procter & Gamble Recalls Pringles Chips

Total revenue increased 13.4% year over year to $3.1 billion, attributable to a 4% benefit from volume. The number of active representatives grew 11% during the quarter.

Sales of Beauty products increased 15%, due increases across all the three categories. Color Cosmetics increased 27%, Fragrance increased 11% and Personal Care increased 19%.

In North America, sales fell 7% as units sold declined 7% while active representatives were up 3%. In Latin America, sales grew 29% as units sold rose 3% and active representatives grew 10%.

Revenue in Western Europe, the Middle East & Africa increased 20%, due to a 19% growth in units sold and 17% growth in active representatives. Sales in Central and Eastern Europe fell 12% as units sold increased 11%, while active representatives grew 15%.

Quarterly sales growth in Asia Pacific increased 13%, as units sold were up 7% year over year and active representatives rose 4%. Sales in China decreased 8%, primarily due to a 1% decline in units sold. However, active representatives for the quarter increased 31%.

Gross margin for the quarter contracted 28 basis points (bps) to 62.7% versus 63.0% in the comparable prior-year quarter. Productivity gains, benefits from the company’s Strategic Sourcing Initiative, and price increases were fully offset by 140 basis points of unfavorable transaction-exchange impact. The operating margin also declined 41 bps to 12.8% from 13.3% in the comparable prior-year quarter.

For the full year 2009, net cash provided by operating activities was $782 million. At the end of the year, Avon’s total debt decreased by $42 million from the year-end level, to $2.4 billion.

Avon has six ongoing restructuring programs targeting a total of $1.08 billion in annualized cost savings. Its major programs include the 2005 Turnaround Plan (targeting $350 in cost savings), PLS – Product Line Simplification initiative ($200 million), SSI – Strategic Sourcing Initiative ($250 million) and 2007 Additional Restructuring Plan ($130 million).

Zacks Investment Research

(AVP) Avon Products Reports Modest Results

Estee Lauder Co. manufacturers and marketers of skin care, makeup, fragrance and hair care products. Brand names include Estee Lauder, Clinique, Aramis, Prescriptives, Origins, M.A.C, Bobbi Brown essentials, La Mer, jane, Aveda, Stila, Jo Malone and Bumble and bumble. The company is also the global licensee for fragrances and cosmetics sold under the TommyHilfiger, Donna Karan and Kate Spade brands. You can’t walk through Nordstroms without being sprayed with one of their products.

I first noticed the stock because all of Barchart’s 13 technical indicators signaled a 100% buy rating. The stock hasn’t closed below its 50 day moving average since back in October of last year and has had a 30.77% price appreciation in the last 65 days.

On a fundamental basis analyst expect the stock to have a 5.3% increase in revenue next year and a 15.7% earnings increase. The best part is they expect that EPS increase to continue for the next 5 years at that same rate. There are 6 major buy recommendations and 9 analysts have increased their earning projections in the last week alone.

On other sites Wall Street Survivor readers give the stock a 5/5 Survivor Sentiment followed by a 4/5 fundamental rating and a 5/5 technical rating. Motley Fool CAPS members think the stock will out perform the market by a vote of 123 to 7 with the All Stars in agreement 40 to 15.

Warren Buffett always says he doesn’t buy stocks he buys companies he understands and that he will want to hold for a lifetime. This company has seen a lot of competitors come and go and is still around to make us all appear a little bit above average.

Recommendation: Buy Estee Lauder below 55 with a stop loss no lower than 48.

Disclosure: No positions in EL at the time of publication

View original at: Financial Tides — A Stock Market Investing Newsletter by Jim Van Meerten

(EL) Estee Lauder: Just make-up on a pig?

The quarterly earnings of $1.28 per share surpassed the Zacks Consensus Estimate of $1.21, and soared 60% from 80 cents delivered in the prior-year quarter. The New York based company, Estee Lauder, now expects third-quarter 2010 earnings in the range of 20 cents to 30 cents a share.

Solid growth in Asia , launch of higher-margin products, gains in the travel retail business, and a strong holiday sales season with favorable foreign currency translation helped results that topped estimates.

Consolidated revenue for the quarter climbed 10.8% year-over-year to $2,262.3 million; excluding foreign currency translation, revenue rose 6.4%. Management expects third-quarter 2010 revenue to increase between 4% and 7% in constant currency.

By product categories – Skin Care product sales rose 17.3% to $905.8 million, Makeup sales jumped 12% to $815.7 million, Hair Care product sales inched 1.4% to $110 million, whereas Fragrance product sales fell by 2.8% to $403.5 million.

By region – sales in The Americas rose 1.4% to $916.9 million; in Europe, the Middle East & Africa sales surged 17.5% to $895.5 million, whereas in the Asia/Pacific region, sales soared by 18% to $442.5 million.

As part of a four-year strategic plan (fiscal year 2010 – 2013), which includes trimming of headcount, and realigning and optimizing the structure of the geographic regions resulted in $83 million savings during the quarter under review. Management expects to realize $65 million in savings during third-quarter 2010.

Estee Lauder forecasted net sales for fiscal year 2010 to grow in the range of 3% to 5%, in constant currency, and expects full year earnings between $2.55 and $2.73 per share. The company anticipates savings between $275 million and $300 million during the year.

Zacks Investment Research

(EL) The Estee Lauder Companies Earnings Jump

Net sales for the quarter increased 6.4% year-over-year to $21.0 billion, driven by a 5% growth in unit volume, 1% benefit from pricing and positive currency translations of 2% contributing to the top line, partially offset by a 2% negative impact from geographic mix. Successful product launches, supported by marketing initiatives, also contributed to the top line. Organic sales grew 5% during the quarter, driven by volume and pricing.

Results by Segment

All three Global Business Units (GBU) witnessed revenue growth during the quarter. Volume in the Beauty segment grew 2%, with the low single-digit growth in female beauty volumes offset by the double-digit decline in Professional salon volume and low-single-digit decline in Prestige volume.

In addition, volume declines in the premium shaving systems, Male Personal Care volume and distribution declines on a non-strategic deodorant brand all impacted volume growth in the Grooming division.

The Household Care segment sales grew 9%. It was driven by high single-digit growth in Fabric Care and double-digit growth in Home Care segments. The growth in Fabric Care was due to due to trade inventory reductions and initiative-driven growth in the current period. Growth in the Home Care division was driven by market growth in North America and CEEMEA and trade inventory reductions in the prior-year period.

In the Baby Care division, volume increased high single-digits, while Family Care volume was up double-digits, primarily attributable to new initiatives and incremental merchandising activity.

The Health and Well Being segment was up 5%, with a 3% increase in unit volume growth. Personal Health Care volume increased mid-single digits due to double-digit growth of Vicks, which was driven by higher cold and flu levels and double-digit growth of diagnostics products. These were partially offset by lower shipments of Prilosec OTC in North America due to increased competitive activity. Oral Care volume grew mid-single digits driven by growth in Western Europe, Latin America and Asia and trade inventory reductions.

Net sales in the Snacks division grew 6% driven by positive pricing actions and favorable foreign exchange. The Pet Care segment increased mid single-digits, driven by the continued success of new product initiatives and increased promotional activity.

On the Balance Sheet

Gross margin for the quarter expanded 328 basis points (bps) to 53.7% versus 50.4% in the comparable prior-year quarter. The increase was primarily driven by benefits of price increases, lower commodity costs and manufacturing cost savings. The operating margin for the quarter also expanded 226 bps to 21.3% from 19.1% in the prior-year quarter.

Operating cash flow for the quarter increased 50% to $3.3 billion, due to reductions in working capital. The company has a debt-to-capitalization ratio of 24%. Capital expenditures for the first six months were $1.3 million.

Based on the performance in the first quarter, management raised its guidance for full fiscal 2010. Organic sales are now expected to grow 2% to 4% compared to 1% to 3% stated earlier. Net sales are reiterated to grow in the range of 3% to 6%.

Foreign exchange is expected to positively contribute 0% to 1% to net sales growth. Annual earnings are expected to be in the range of $4.02 to $4.12. Core earnings are now expected to be in the range of $3.53 to $3.63 per share compared to $3.47 to $3.59 stated earlier. Management increased the low end of the guidance range by $0.06 per share.

For the third quarter, management expects organic sales growth of 4% to 6%. Foreign exchange is expected to add 3% to 4% to sales in the quarter.

Net sales are expected to increase 7% to 10% versus the prior year. Core earnings are expected in the range of $0.77 to $0.82 per share.

Zacks Investment Research

(PG) The Procter & Gamble Company Reports Strong Second Quarter

Net sales for the quarter increased 11.5% year-over-year to $4.1 billion as unit volume increased 3.0%, pricing contributed 3.5% and foreign exchange contributed 5.0%. Organic sales (excluding foreign exchange, acquisitions and divestitures) increased 6.5% in the quarter.

Full-year 2009 net sales were flat year-over-year to $15.3 billion. Unit volume growth was 0.5% and pricing increased 6.0%, which was partially offset by a 6.5% negative foreign exchange impact. Organic sales for the year increased 6.5%.

North American sales increased 5.0% driven by 5.5% unit volume growth and a 1% favorable foreign exchange, partially offset by 1.5% lower pricing. In Latin America, sales grew 22.5% as unit volume increased 5.0%, driven by solid gains in Brazil and Columbia. In addition, pricing contributed 12.0% and foreign exchange contributed positive 5.5% to the top line.

In Europe/South Pacific, sales grew 12.5% as unit volume increased 2.5%, driven by volume gains in France, Italy, the United Kingdom and the GABA business. Although pricing was down 0.5%, foreign exchange contributed positive 10.5%. Sales in Greater Asia/Africa increased 10.5%, while unit volume grew 8.0% as volume gains in India, the Greater China and Thailand. Pricing increased 0.5% and foreign exchange contributed positive 2.0%.

Sales in the Hill’s Pet Nutrition business grew 1.5%, however unit volume declined 8.5% due to declines in the U.S., Japan and Russia, partially offset by gains in Germany, Australia and Mexico. Pricing contributed 3.0% and favorable foreign exchange contributed positive 4.0% to the top line.

Gross margins expanded 352 basis points (bps) to 59.4% from 56.0% in the prior-year period, driven by benefits of restructuring activities and pricing. The operating margin also increased 308 bps to 24.3% versus 21.2% in the prior-year quarter. Capital expenditures for fiscal 2009 were $575 million.

For the full year, net cash provided by operations increased 42% to $3.3 billion, due to efficient working capital management, especially a reduction in receivable days outstanding. The company has a debt-to-total-capitalization ratio of 50.5%.

Zacks Investment Research

(CL) Colgate Palmolive Company Beats Wall Street’s Consensus

Company Description

Alberto-Culver Co and its subsidiaries specialize in developing consumer and household products that it sells both domestically and internationally. The company’s product portfolio ranges from moisturizing lotions to cleaning products. Alberto Culver had paid a dividend since 1967 and has a market cap of $2.85 billion.

Third-Quarter Results

Shares of ACV jumped higher in late October on the company’s better than expected Q3 results. Revenues were mostly flat from last year at $385.2 million, but earnings came in ahead of expectations at 33 cents, a penny better than the Zacks Consensus Estimate. Alberto has been able to produce consistent results over the last year in a very tough market, beating or matching the Zacks Consensus Estimate in each of the last 4 quarters by an average of 9%.

The company’s results were driven by a strong showing in the U.S., where sales were up 8.3% from last year on the acquisition of Noxzema and gains in TRESemme and St. Ives.

Estimates

Analysts are bullish on Alberto, with estimates steadily rising over the last few months. The current year has added 9 cents to $1.58, while the next-year estimate is up 11 cents to $1.80, a 14% growth projection.

Valuation

In spite of the recent gains this stock still looks reasonably valued, trading with a forward P/E multiple of 18X, in line with the overall market.

The Chart

Shares of ACV bottomed out in late April just above $20 before turning the corner and launching the current up trend. More recently, ACV has been pressuring some short-term resistance just above $30, take a look below.

Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the market-beating Zacks Surprise Trader Service.

Zacks Investment Research

(ACV) Alberto Culver Company – 14% Growth Projections

Better-than-expected sales performance is being driven by continued growth in Asia, successful new innovation, and improved results from the company’s travel retail business and the holiday season in the U.S. In addition, a favorable impact of foreign currency translation contributed to the company’s top-line in the quarter.

The lower spending in the quarter reflects caution in many of the company’s businesses given the extent of the global economic downturn and the potential risks in the near term. The company maintained a measured approach to investing, particularly in advertising and promotion.

However, to sustain competitiveness, the company said that it plans to accelerate investment spending behind its brands and key priorities in the second half of the fiscal year.

Estee Lauder Companies is one of the world’s leading manufacturers and marketers of skin care, makeup, fragrance and hair care products.

The company is scheduled to report its second-quarter results on January 28, 2010.

Zacks Investment Research

(EL) The Estee Lauder Companies Raises Guidance

It’s hard to find a more blue, blue chip company than the world’s largest consumer goods company, Procter & Gamble (NYSE: PG).

Around for 172 years now, the company does business with over four billion customers in more than 180 countries. And it brings in $79 billion in annual sales from its ventures, 30% of which come from developing markets.

In addition:

• Brands like its Pantene, Wella and Head & Shoulders account for one-fifth of all hair product sales around the world.
• Gillette – also a P&G subsidiary – makes more than 70% of the world’s razors and blades.
• It brought Crest dental whitening strips, Swiffer cleaning mops and a host of other new products to the market, keeping its rivals on their toes to keep up.

But even while it continued setting standards for consumer goods marketing everywhere, Procter & Gamble still stumbled in the last quarter when the price hikes it instituted to combat inflation back in 2008 came back to bite it badly.

Fortunately for its investors, P&G has both the desire and the means to turn this downturn into a profitable opportunity yet…

Mistakes… The Proctor & Gamble Way

Like so many other companies around the world, the financial crisis took Proctor & Gamble by surprise, exposing corporate weaknesses and sending the giant scrambling to stabilize itself.

Quite simply, the corporation had the wrong product portfolio for the economic environment: A portfolio skewed towards higher-end and discretionary items.

It also got it wrong when it came to the emerging markets, investing heavily in Russia and Eastern Europe – both of which suffered greatly during the financial crisis – and not so much in Asia and Latin America, where consumers already knew how to handle inflation-related price increases.

And Proctor & Gamble messed up again by raising prices in its overseas markets to defend its brands’ profitability at a time when consumers everywhere were turning to cheaper items instead.

In Russia, for instance, the company tried to cope with the falling currency by charging more for products like Ariel detergent and Head and Shoulders shampoo not once… not twice… but four times.

Management knew sales would still take a hit doing that, but they didn’t expect nearly the damage they saw in the books when springtime came around this year.

Proctor & Gamble’s Comeback Bid

Losing business to smaller competitors everywhere, Proctor & Gamble’s new CEO, Bob McDonald, decided to shift the company’s focus away from high-end products and onto value alternatives.

By targeting new customers, this new strategy directly combats the competition through marketing and new value products that take advantage of current consumer trends.

For example, in the U.S., P&G recently launched lower-cost versions of its Charmin and Bounty paper towels, with further plans to debut a cheaper kind of Tide laundry detergent in the near future.

In 2009, the company only offered value versions of about half of its product categories to its 17 top-selling countries. Over the next two years though, that number should increase to about 75%.

Mr. McDonald maintains that the company is now placed to deliver profitable growth over the coming give years. He says:

“In those five years, we’re going from reaching four billion consumers using our products, to five billion consumers. And we’re going to go from the average consumer in the world spending $12 a year on P&G products to $14 a year.”

Boldly going where it hasn’t bothered much with before, the company is targeting international markets these days by building almost 20 manufacturing plants in countries like India – where consumers spend less than $1 per person per year on P&G products – and China, where they only spend about $3.

Of course, with its late start into those locations, Proctor & Gamble will have to play a serious game of catch-up against entrenched rivals like Colgate (NYSE: CL) and Unilever ADR (NYSE: UN).

But the global giant has the financial firepower to back it up. And seeing how that’s where the growth is, Proctor & Gamble has the conviction to see this strategy through to a long-term successful future.

Good investing,

Tony Daltorio

View original at: Investment U

(PG) Why Proctor & Gamble Is Still The One To Watch

Company Description

Avon Products is beauty company with over $10 billion in annual revenue. As the world’s largest direct seller, Avon markets to women in more than 100 countries through 5.8 million independent Avon Sales Representatives. Avon’s product line includes beauty products as well as fashion and home products. The company features such well-recognized brand names as Avon Color, Anew, Skin-So-Soft, Advance Techniques, Avon Naturals and Mark.

Bullish Forecasts

The company continues to see a higher Zacks Consensus Estimates. For the current full year, the earnings forecast stands at $1.72 per share, up from $1.66 over the past 90 days. For 2010, the projection of $2.20 rose from the 3 months-ago level of $2.10.

Solid Earnings

In late October, the company reported third-quarter earnings of 42 cents per share, exceeding the Zacks Consensus Estimate by 8%. Revenue slipped 4% year-over-year but was up 7% on a local-currency basis.

Favorable Industry Comparisons

Avon boasts a return on equity (ROE) of 87%, dwarfing the industry average of 8%. The company’s net profit margin of 6% compares to an industry average of 4%. Avon pays an industry-leading dividend yield of 2.6%.

Zacks Investment Research

(AVP) Avon Products Incorporated – Return on Equity of 87% Crushes Industry Average

It’s hard to find a more blue, blue chip company than the world’s largest consumer goods company, Procter & Gamble (NYSE: PG).

Around for 172 years now, the company does business with over four billion customers in more than 180 countries. And it brings in $79 billion in annual sales from its ventures, 30% of which come from developing markets.

In addition:

• Brands like its Pantene, Wella and Head & Shoulders account for one-fifth of all hair product sales around the world.
• Gillette – also a P&G subsidiary – makes more than 70% of the world’s razors and blades.
• It brought Crest dental whitening strips, Swiffer cleaning mops and a host of other new products to the market, keeping its rivals on their toes to keep up.

But even while it continued setting standards for consumer goods marketing everywhere, Procter & Gamble still stumbled in the last quarter when the price hikes it instituted to combat inflation back in 2008 came back to bite it badly.

Fortunately for its investors, P&G has both the desire and the means to turn this downturn into a profitable opportunity yet…

Mistakes… The Proctor & Gamble Way

Like so many other companies around the world, the financial crisis took Proctor & Gamble by surprise, exposing corporate weaknesses and sending the giant scrambling to stabilize itself.

Quite simply, the corporation had the wrong product portfolio for the economic environment: A portfolio skewed towards higher-end and discretionary items.

It also got it wrong when it came to the emerging markets, investing heavily in Russia and Eastern Europe – both of which suffered greatly during the financial crisis – and not so much in Asia and Latin America, where consumers already knew how to handle inflation-related price increases.

And Proctor & Gamble messed up again by raising prices in its overseas markets to defend its brands’ profitability at a time when consumers everywhere were turning to cheaper items instead.

In Russia, for instance, the company tried to cope with the falling currency by charging more for products like Ariel detergent and Head and Shoulders shampoo not once… not twice… but four times.

Management knew sales would still take a hit doing that, but they didn’t expect nearly the damage they saw in the books when springtime came around this year.

Proctor & Gamble’s Comeback Bid

Losing business to smaller competitors everywhere, Proctor & Gamble’s new CEO, Bob McDonald, decided to shift the company’s focus away from high-end products and onto value alternatives.

By targeting new customers, this new strategy directly combats the competition through marketing and new value products that take advantage of current consumer trends.

For example, in the U.S., P&G recently launched lower-cost versions of its Charmin and Bounty paper towels, with further plans to debut a cheaper kind of Tide laundry detergent in the near future.

In 2009, the company only offered value versions of about half of its product categories to its 17 top-selling countries. Over the next two years though, that number should increase to about 75%.

Mr. McDonald maintains that the company is now placed to deliver profitable growth over the coming give years. He says:

“In those five years, we’re going from reaching four billion consumers using our products, to five billion consumers. And we’re going to go from the average consumer in the world spending $12 a year on P&G products to $14 a year.”

Boldly going where it hasn’t bothered much with before, the company is targeting international markets these days by building almost 20 manufacturing plants in countries like India – where consumers spend less than $1 per person per year on P&G products – and China, where they only spend about $3.

Of course, with its late start into those locations, Proctor & Gamble will have to play a serious game of catch-up against entrenched rivals like Colgate (NYSE: CL) and Unilever ADR (NYSE: UN).

But the global giant has the financial firepower to back it up. And seeing how that’s where the growth is, Proctor & Gamble has the conviction to see this strategy through to a long-term successful future.

Good investing,

Tony Daltorio

View original at: Investment U

($PG) Why Proctor & Gamble Is Still The One To Watch

The acquisition of Ambi Pur strengthens Procter and Gamble’s global leadership business in Home Care, especially Air Care by reaching out to more consumers worldwide. This acquisition not only brings in the strong Ambi Pur brand equity, but also provides geographic presence particularly in Europe and Asia.

Moreover, the Ambi Pur brand acquisition adds high-performance products and new technologies to the company’s current Air Care portfolio. The products include car air fresheners, battery-powered air fresheners, toilet rim blocks and other non-energized air fresheners.

The transaction is subject to customary closing conditions and regulatory approvals. The deal is expected to close in the current fiscal year, ending on June 30, 2010. PG also stated that the transaction will not have any material impact on the company’s results in fiscal year 2010.

The acquisition is also in line with the company’s strategy of focusing on Personal Health Care (includes Home care business), Oral Care and Feminine Care. In Aug. 2009, the company sold off its pharmaceutical business to Warner Chilcott plc (WCRX) for $3.1 billion.

Zacks Investment Research

(PG) The Procter & Gamble Company Acquires Ambi Pur Brand From Sara Lee Corporation

Company Description

Kimberly-CLark Corp., together with its subsidiaries, manufactures health and hygiene products like tissue and diapers worldwide. The company was founded in 1872 and has a market cap of $26.5 billion.

Shares of KMB have recently pulled back a bit after hitting a new 52-high last week just above $67. But the long-term trend is still bullish, helped by the company’s strong Q3 results, reported on Oct 22.

Third-Quarter Results

Sales were mostly flat from last year, down 1.7% to $5 billion. But earnings came in far better than expected at $1.40 per share, 27 cents ahead of the Zacks Consensus Estimate.

The company noted that it benefited from lower commodity prices and growth in its healthcare division, where sales were up 18% from last year.

Estimates

Estimates have been on the rise for the last few months, with the current year up 36 cents to $4.59. The next-year estimate is pegged at $5.19, a solid 12% growth projection.

Valuation

Based on the current year estimate, this stock has some value, trading at just 14X, a discount to the overall market.

The Chart

Shares of KMB recently pulled back from the new 52-week high set last week. The long-term trend is still bullish, take a look below.

Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the market-beating Zacks Surprise Trader Service.

Zacks Investment Research

(KMB) Kimberly Clark Corporation – Discount to the Overall Market

The Education section of Zacks.com offers a plethora of detailed articles and helpful information on each style of investing. Extremely helpful are the guides for each style.

Because I write about Growth and Income stocks and in light the Fed’s near-zero rate policy, I want to focus on growth stocks that also reward shareholders with dividends that are well above current interest rate levels.

However, links are provided to guides for all four investment styles at the end of the article.

What to Expect with Growth and Income

Generally, a Growth and Income play will have healthy balance sheets, consistent dividend payments, quality products and services and experienced management teams. Usually Growth and Income companies are industry leaders, displaying steady
earnings growth.

Companies that continually exhibit stable earnings growth, more than anything else, are ones that should hit the radar screens of Growth & Income investors. After all, companies exhibiting all of the characteristics mentioned earlier should have no problem producing a steady stream of profit growth. Analysts will subsequently grow more optimistic about the future earnings potential of the company and adjust their estimates up accordingly.

Growth & income investors get a dual benefit from following earnings estimate revisions. First, positive estimate revisions help investors buy shares in the companies with the best chances to outperform the market. Second, positive estimate revisions provide the easiest means to monitor the health of companies, providing a rather clear signal when the time has come to abandon ship. Companies experiencing upward estimate revisions will generally enjoy positive momentum going forward. Rarely will a stock suffer a significant price decline in the face of improving fundamentals. Add it all up and it’s clear that Growth and Income investors should only buy shares in companies enjoying upward earnings estimate revisions. The best way to harness this phenomenon is through the Zacks Rank.

Solid Growth and Income picks should carry a Zacks Rank of #1 (Strong Buy) or #2 (Buy). Check out the Guide to Growth and Income investing for more detailed information on this style of investing and the important role that the Zacks Rank plays in screening for Growth and Income stocks.

I did a little screening of my own using the Research Wizard and discovered several stocks that offer a dividend yield of more than 2%. I didn’t stop there. I also made sure that the fundamentals were sold and signaling growth. The Research Wizard helped me find nearly 30 companies that posses the following attributes:

*A Zacks Rank #2 or better

*A return on equity (ROE) of better than 10%

*The company’s earnings per share expected to grow by more than 10% over the next 3 – 5 years.

3 Solid Growth and Income Picks

I highlighted 3 of the stocks to give you an idea of the kind of fundamentals these Growth and Income plays offer. Try the Research Wizard for yourself and discover many more winning stocks.

Avon Products (AVP), the world’s largest direct seller, markets to women in more than 100 countries through 5.8 million independent Avon Sales Representatives. Avon’s product line includes beauty products as well as fashion and home products.

The company recently declared a quarterly dividend of 21 cents per share, which translates into an industry-leading yield of 2.4%. The dividend is payable December 1 to shareholders of record November 20.

In late October, Avon reported third-quarter earnings of 42 cents per share, exceeding the Zacks Consensus Estimate by 8%. Revenue slipped 4% year-over-year but was up 7% on a local-currency basis.

The company is seeing bullish earnings estimates. The full-year Zacks Consensus Estimate of $1.72 per share is up 6 cents over the past 60 days.

For 2010, analysts polled by Zacks are projecting earnings of $2.20 per share, versus the 2 months-ago level of $2.10.
Polaris Industries, Inc. (PII) designs, engineers, manufactures and markets off-road vehicles (ORVs), including all-terrain vehicles (ATVs) and the Polaris RANGER(TM), snowmobiles and Victory motorcycles for recreational and utility use and has recently introduced a new on-road electric powered neighborhood vehicle.

The company recently declared a quarterly dividend of 39 cents per share, which translates into an industry-leading yield of 3.5%. The dividend was paid out on November 16.

In mid-October, the company announced third-quarter earnings of 94 cents per share, which was below the previous year’s $1.13 but 12% ahead of the Zacks Consensus Estimate.

Polaris upped its full-year earnings guidance to a range of $2.92 to $2.98 per share, versus the previous range of $2.70 to $2.90 per share.

Analysts polled by Zacks hiked 2009 earnings estimates to $2.96 per share from the 2 months-ago level of $2.78.

For 2010, the Zacks Consensus Estimate of $3.22 was increased from $3.05 over the past 60 days.

Tupperware Brands Corporation (TUP) sell design-centric preparation, storage and serving solutions for the kitchen and home through the Tupperware brand as well as beauty and personal care products through its Avroy Shlain, BeautiControl, Fulller, NaturCare, Nutrimetrics, and Nuvo brands.

Analysts polled by Zacks are upbeat on TUP’s earnings. The full-year Zacks Consensus Estimate of $2.90 per share is up from $2.66 over the past 60 days.

For 2010, analysts are calling for earnings of $3.44, versus the 2 months-ago level of $3.05.

The company reported third-quarter earnings of 54 cents per share, topping the Zacks Consensus Estimate by 29% and surpassing the previous year’s 47 cents. Sales were up 9% in local currency.

Tupperware declared a dividend of 25 cents, representing a 14% hike. Tupperware stated that the dividend is payable on January 4 to shareholders of record on December 4. The company pays an industry-leading dividend yield of 2%.

Additional Resources

Zacks Guide to Aggressive Growth

Zacks Guide to Growth and Income

Zacks Guide to Momentum

Zacks Guide to Value

Research Wizard – Use this sophisticated tool to screen for your own Growth and Income picks. Or, create new strategies and backtest them.

Zacks Custom Screener – Use this free tool to create your own screens.

Alex Kolb is the Growth & Income Stock Strategist for Zacks.com. He also writes the popular daily commentary column for the ZacksElite.com service.

Zacks Investment Research

(AVP) Earn Solid Income in a Low Rate Environment – Investment Ideas

Company Description

Nu Skin Enterprises is a $1 billion direct selling company that markets and distributes premium quality personal care, nutrition and technology products through a global network of more than 750,000 active independent distributors and preferred customers. The company operates three core brands, Nu Skin, Pharmanex, and Big Planet.

The Nu Skin brand has a line of more than 100 premium skin treatment and other personal care products. With a team of more than 100 in-house scientists, Pharmanex uses a pharmaceutical approach that is setting the standard for the dietary supplement industry. Big Planet brings the benefits of technology to everyone with innovative products like Maxvault, a line of products that provide the easiest way to preserve, organize, share, and enjoy your photos and home movies.

Nu Skin Enterprises operates in 48 international markets across the Americas, the Asia Pacific region and Europe, with more than 75 percent of revenue coming from Asia.

Bullish Forecasts

The company recently hiked its earnings outlook and analysts followed suit. Nu Skin sees fourth-quarter earnings ranging between 38 and 40 cents. Analysts polled by Zacks are calling for 40 cents, up from last month’s 35 cents.

For 2009, Nu Skin’s outlook ranges between $1.43 and $1.45 per share. The Zacks Consensus Estimate stands at $1.45, an increase from the previous month’s $1.40.

For the following year, Nu Skin’s guidance ranges between $1.60 and $1.70 per share. The Zacks Consensus Estimate of $1.70 is above the month-prior $1.61.

Strong Momentum

Shares of NUS continue to outpace the market, trading near a 52-week high. During the past year, NUS has more than tripled the market’s return. In the last 3 months alone, shares surged by more than 50%, while the S&P 500 was up barely 10%.

Rewarding Shareholders

The company also recently declared a quarterly dividend of $0.115 per share, which will be paid out on December 9 to shareholders of record as of November 27.

Nu Skin offers an industry-leading dividend yield of 1.7%.

A Record Quarter

The company saw record results for the third quarter. Earnings per share of 41 cents topped the previous year’s 26 cents and matched the Zacks Consensus Estimate. Revenue was a record $334.2 million, an increase of 8% year-over-year.

Alex Kolb is the Growth & Income Stock Strategist for Zacks.com. He also writes the popular daily commentary column for the ZacksElite.com service.

Zacks Investment Research

(NUS) Nu Skin Enterprises – Strong Momentum – Bullish Forecasts

Company Description

Nu Skin Enterprises is a $1 billion direct selling company that markets and distributes premium quality personal care, nutrition and technology products through a global network of more than 750,000 active independent distributors and preferred customers. The company operates three core brands, Nu Skin, Pharmanex, and Big Planet.

The Nu Skin brand has a line of more than 100 premium skin treatment and other personal care products. With a team of more than 100 in-house scientists, Pharmanex uses a pharmaceutical approach that is setting the standard for the dietary supplement industry. Big Planet brings the benefits of technology to everyone with innovative products like Maxvault, a line of products that provide the easiest way to preserve, organize, share, and enjoy your photos and home movies.

Nu Skin Enterprises operates in 48 international markets across the Americas, the Asia Pacific region and Europe, with more than 75 percent of revenue coming from Asia.

A Record Quarter and Bullish Forecasts

The company recently posted record results for the third quarter. Earnings per share of 41 cents topped the previous year’s 26 cents and matched the Zacks Consensus Estimate. Revenue was a record $334.2 million, an increase of 8% year-over-year.

Nu Skin boosted its annual earnings guidance to $1.38 to $1.40 per share. The company sees fourth-quarter earnings coming in 32 to 34 cents per share.

Analysts polled by Zacks are calling for 2009 earnings of $1.41 per share, a penny higher than last week and above last month’s $1.28.

For the fourth quarter, the Zacks Consensus Estimate of 36 cents per share is up a penny from last week and 5 cents above last month’s projection.

Outstanding Fundamentals

Nu Skin’s return on equity (ROE) of 25% dwarfs the industry average of 6%. The company’s net profit margin of 6% tops the industry average of 3%. Nu Skin pays an industry -leading dividend yield of 2%.

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(NUS) Nu Skin Enterprises – ROE of 25% Dwarfs the Industry Average of 6%

Net sales for the quarter were flat year-over-year declining marginally by 0.3% to $3.9 billion as unit volume increased 1.5% and pricing contributed 5.0%. This was partially offset by negative foreign exchange translation of 6.5%. Organic sales (excluding foreign exchange, acquisitions and divestitures) increased 7.0% in the quarter.

North American sales increased 3.0% driven by 1.5% pricing and 5.0% unit volume growth, partially offset by 0.5% negative currency translations. In Latin America, sales grew 5.0% as unit volume increased 3.0% driven by solid gains in Venezuela which were partially offset by an 11.0% negative foreign exchange impact.

In Europe/South Pacific, sales declined 5.5%; however, unit volume increased 2.5% as volume gains in U.K. and Greece, were more than offset by the declines in France, Germany the U.K., Denmark, Greece, Portugal and the GABA business. Sales in Greater Asia/Africa declined 3.0% while unit volume declined 2.5% as volume gains in India, Thailand and Turkey were more than offset by declines in Russia, the Philippines, South Africa and the Ukraine.

Sales in the Hill’s Pet Nutrition business grew 1.5%, however unit volume declined 2.5% and foreign exchange had a negative impact of 0.5%, which was partially offset by a 4.5% increase in pricing. Demand was strong for existing products such as Science Diet Culinary Creations feline products and the expanded line of Science Diet Simple Essentials Treats Canine.

Gross margins expanded 313 basis points (bps) to 59.2% from 56.1% in the prior-year period driven by benefits of restructuring activities and pricing. The operating margin also increased 333 bps to 22.2% versus 19.8% in the prior-year quarter, driven by a 30 bps decline in advertising. Capital expenditures for the first nine months of 2009 were $347 million.

Year-to-date net cash provided by operations increased 34% to $23.7 billion, due to efficient working capital management, especially a reduction in receivable days outstanding. The company has a debt-to-total-capitalization ratio of 52.5%.

Concurrent with the earnings release, management provided the outlook for the remainder of fiscal 2009. Management expects continued improvement in gross margins for the rest of the year, due to moderation in commodity costs and benefits from pricing and cost reduction programs.

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(CL) Colgate Palmolive Company Reports Modest Earnings

The company’s business in each of its product categories and geographic regions continued to be affected by challenging and volatile economic conditions. Nevertheless, the company was able to outperform because of the better-than-expected sales and lower spending levels in each of the product categories and geographic regions.

The better-than-expected sales were driven by strong sell-in of higher-margin product launches, greater passenger traffic in the company’s travel retail business and improved foreign currency translation. Furthermore, the lower spending reflects caution in many of the company’s businesses given the extent of the global economic downturn and the potential risks in the near term.

However, consolidated revenue for the quarter declined 3.7% to $1.83 billion amid weak global retail demand on account of the economic recession. Top-line growth is typically constrained by low volume growth and limited pricing power.

By product categories — Skin Care sales increased 1.9% to $687.8 million, while Makeup sales declined 3.4% to $718 million, Fragrance product sales fell by 11.1% to $292 million, and Hair Care product sales declined marginally by 0.9% to $98 million. ??By region — sales in The Americas fell 5.0% to $892 million; in Europe, the Middle East & Africa sales were down 6.2% to $602 million. However, in the Asia/Pacific region, sales went up by 10.7% to $358 million.

In addition, to combat the downturn, in February of this year, management announced a four-year strategic plan (fiscal years 2010 – 2013) to cut costs by $450 million to $550 million, trim headcount by approximately 2,000 employees, or 6% of the work force, realign and optimize the structure of the geographic regions to better leverage scale, improve productivity and reduce complexity, which should accelerate sales growth.??Management expects savings in the range of $175 million to $200 million during fiscal 2010.

At the end of the quarter, the company had cash and cash equivalents of $799 million, and long-term debt of $1,389.4 million representing a debt-to-capitalization ratio of 42.8%.

Based on the strong profits in the first quarter of 2009, management raised its annual earnings for fiscal 2010. Full-year 2010 earnings are now expected to be in the range of $1.95 to $2.10 per share.

Net sales are reiterated to grow in the range of 0% and 2% in constant currency. Foreign currency translation is expected to positively contribute approximately 2% to 3% to sales.

During the fiscal year, the company expects to invest a portion of the savings from the first quarter to build momentum and drive growth. On a product category basis, in constant currency, sales in skin care, hair care and makeup are expected to grow. However, Fragrance sales are expected to decline.

Geographic region net sales growth in constant currency is expected to be led by Asia/Pacific, followed by Europe, the Middle East & Africa. Sales in the Americas are expected to decline.

Management also provided guidance for the second quarter of fiscal 2010. Net sales are expected to increase in the range of 0% and 3% in constant currency. Foreign currency translation is expected to benefit sales by approximately 3% to 4%.

Quarterly earnings are expected to be in the range of 80 cents to 87 cents per share. The company expects to realize savings of approximately $50 million in the second quarter of fiscal 2010, in connection with its long-term strategic plan, as well as certain on-going initiatives.

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(EL) Estee Lauder Companies Report In Line Earnings

Net sales for the quarter declined 5.6% year-over-year to $19.8 billion, as a 3% benefit from pricing and 1% benefit from product mix was fully offset by a 3% decline in unit volume — a 7% unfavorable impact of foreign currency and a 1% impact of divestitures. However, successful product launches, supported by marketing initiatives, contributed to the top line. Organic sales grew 2% during the quarter driven by pricing and product mix.

All three Global Business Units (GBU) witnessed revenue declines during the quarter. The Beauty segment declined 5%, with the low single-digit growth in retail hair care volumes offset by the double-digit decline in Professional salon volume and mid-single-digit decline in female beauty volume. In addition, high single-digit declines in blades & razors impacted the Grooming division. Strong growth of Gillette and Fusion brands were offset by declines in Braun.

The Household Care segment sales contracted 5%. It was impacted by a low single-digit decline in Fabric Care and Home Care segments. The decline in Fabric Care was due to global market share contractions and trade inventory reductions in North America.

In the Baby Care division, volume increased low single-digits, which was partially offset by mid single-digit declines in the Family Care division, primarily attributable to trade inventory reductions and market share losses due to a shift in timing of merchandising activity.

The Health and Well Being segment declined 4%. The segment was impacted by low single-digit volume decline in the Feminine Care business. However, Oral Care volume was in line with the prior-year quarter.

The Snacks division witnessed decline in double-digits due to lower merchandising activity in North America. The Pet Care segment declined low-single-digits as a result of contraction in the premium nutrition category. This was partially offset by the continued success of new product initiatives.

Gross margin for the quarter expanded 287 basis points (bps) to 52.6% versus 49.7% in the comparable prior-year quarter. The increase was primarily driven by benefits of price increases, lower commodity costs and manufacturing cost savings. The operating margin for the quarter also expanded 156 bps to 22.5% from 20.9% in the prior-year quarter.

Operating cash flow for the quarter increased 32% to $4.6 billion, due to reductions in working capital. The company has a debt to capitalization ratio of 25%. Capital expenditures for the quarter were $555 million (2.8% of net sales).

The company is on track to complete the sale of its global pharmaceuticals business to Warner Chilcott, as stated by management earlier. The estimated financial impacts of the transaction are unchanged versus prior guidance.

Based on the performance in the first quarter, management raised its guidance for full fiscal 2010. Organic sales are now expected to grow 2% to 4% compared to 15 to 3% stated earlier. Net sales are expected to grow in the range of 3% to 6%.

Foreign exchange is expected to positively contribute 1% to 2% to net sales growth. Previous guidance was an adverse impact of 0% to 1%. Annual earnings are now expected to be in the range of $4.02 to $4.12. Core earnings are now expected to be in the range of $3.47 to $3.59. Management increased the low end of the guidance range by $0.03 per share.

For the second quarter, management expects organic sales growth of 2% to 5%. Foreign exchange is expected to add 1% to 2% to sales in the quarter. Net sales are expected to increase 3% to 7% versus the prior year. Core earnings are expected in the range of $0.91 to $1.00 per share.

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(PG) Procter & Gamble Reports In Line Earnings Results

Company Description

Avon Products is beauty company with over $10 billion in annual revenue. As the world’s largest direct seller, Avon markets to women in more than 100 countries through 5.8 million independent Avon Sales Representatives. Avon’s product line includes beauty products as well as fashion and home products. The company features such well-recognized brand names as Avon Color, Anew, Skin-So-Soft, Advance Techniques, Avon Naturals and Mark.

Rising Forecasts and Strong Momentum

The company is seeing bullish earnings estimates ahead of reporting nest week. The full-year Zacks Consensus Estimate of $1.66 per share is up 5 cents over the past 90 days.

For 2010, analysts polled by Zacks are projecting earnings of $2.11 per share, versus last month’s $2.08 and the 3 months-ago forecast of $1.95.

Third-quarter forecasts of 39 cents per share were increased from 36 cents over the past 90 days.

Avon is scheduled to announce third-quarter results on October 29.

The share price, which is very close to a 52-week high, has seen strong momentum lately, outpacing the market by about 5% during the past 3 months.

Favorable Industry Comparisons

Avon boasts a return on equity (ROE) of 88%, dwarfing the industry average of 8%. The company’s net profit margin of 6.5% compares to a negative industry average. This Growth and Income pick pays an industry-leading dividend yield of 2.5%.

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(AVP) Avon Products – Rising Forecasts and Strong Momentum

Company Description

Avon Products is beauty company with over $10 billion in annual revenue. As the world’s largest direct seller, Avon markets to women in more than 100 countries through 5.8 million independent Avon Sales Representatives. Avon’s product line includes beauty products as well as fashion and home products. The company features such well-recognized brand names as Avon Color, Anew, Skin-So-Soft, Advance Techniques, Avon Naturals and Mark.

Rising Forecasts and Strong Momentum

The company is seeing bullish earnings estimates ahead of reporting nest week. The full-year Zacks Consensus Estimate of $1.66 per share is up 5 cents over the past 90 days.

For 2010, analysts polled by Zacks are projecting earnings of $2.11 per share, versus last month’s $2.08 and the 3 months-ago forecast of $1.95.

Third-quarter forecasts of 39 cents per share were increased from 36 cents over the past 90 days.

Avon is scheduled to announce third-quarter results on October 29.

The share price, which is very close to a 52-week high, has seen strong momentum lately, outpacing the market by about 5% during the past 3 months.

Favorable Industry Comparisons

Avon boasts a return on equity (ROE) of 88%, dwarfing the industry average of 8%. The company’s net profit margin of 6.5% compares to a negative industry average. This Growth and Income pick pays an industry-leading dividend yield of 2.5%.

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(AVP) Avon Products – ROE of 88% – Dwarfs Industry Average of 8%

Baylis was founded by Gloria Baylis (a registered nurse) in Montreal in 1986. In addition, to pain management products, the company also makes high-tech medical devices for cardiology and radiology.

The acquisition is believed to improve the competitive position of the company’s Health Care segment in the $2 billion global market for minimally invasive chronic spinal pain management.

However, the financial terms of the transaction were not disclosed. Since 2001, Kimberly Clark’s Health Care division has been the exclusive distributor of Baylis Medical’s pain management products in the U.S.

Management stated that the Baylis pain management business acquisition is consistent with the company’s global business strategy to invest in the higher-growth, higher-margin medical device market. This transaction will enable Kimberly-Clark to accelerate its growth in the pain management business around the world while strengthening its commitment to patients suffering from chronic spinal pain.

Kimberly-Clark is known as the maker of Huggies diapers and Kleenex tissues. Its Health Care segment (5% of revenues) manufactures and markets disposable health care products, such as surgical gowns, drapes, infection control products, sterilization wrap, face masks, exam gloves, respiratory items and other disposable medical products.

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(KMB) Kimberly-Clark Aquires New Pain Management Business

Last December, P&G had announced its intention to restrict making new investments in the pharmaceutical division and divest its interest in the healthcare brands. It decided to focus more on over-the-counter products such as Pepto Bismol, Prilosec, Vicks cough medicines and other personal care brands. Management stated that the pressure from generics was also one of the reasons for it to consider divestiture of this business.

Earlier in fiscal 2008, P&G sold its Folgers coffee business to J.M. Smucker Inc. (SJM) and added beauty and grooming businesses to its portfolio. The company’s prescription drugs division comprises products such as Actonel for osteoporosis (which generates more than $1 billion in revenue) and Enablex for the treatment of overactive bladder.

Warner Chilcott, which makes birth control, female hormone therapies and dermatological products, believes this acquisition will be a strategic fit to its existing business. The deal is expected to expand its market share in the women’s health market. Warner Chilcott will run the newly acquired business as its 100% subsidiary.

Private equity firm Cerberus Capital Management and drug maker Forest Laboratories (FRX) had also shown their interest in purchasing P&G’s prescription drug business.

Six banks, including Bank of America Corp. (BAC), JPMorgan Chase & Co. (JPM), Credit Suisse (CS), Citigroup (C), Morgan Stanley (MS) and Barclays (BCS) are expected to provide about $4 billion in financing for the deal. Out of this, Warner Chilcott will use $3 billion for the acquisition and the remaining $1 billion for refinancing its existing debt.

The deal is the largest leveraged loan transaction so far this year, providing an indication of reviving credit markets and a positive development in the loan market, especially after the collapse of Lehman Brothers.

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(PG) P&G Finds Buyer for Drug Business

The company’s quarterly net sales and profit dipped 11% and 18%, respectively. Procter & Gamble has lost market share to its competitors and other private-label brands in recent months. Sales volume fell by 5%. Moreover, international sales were hurt as the company raised prices to pass on higher product costs to consumers on the back of a stronger dollar.

Consumers with lower disposable income are also veering towards cheaper substitutes. In order to revive sales and capture the loss market share, Procter & Gamble announced plans to cut prices, expand its retail channels, including online sales, to focus more on lower priced value driven products and simplify its global operations.

For the first quarter of 2010, management expects organic sales growth of 0% to negative 3%. Foreign exchange is expected to hurt sales by approximately 7%. Therefore, net sales are expected to be down 7% to 10% versus the prior year. Earnings are expected in the range of 95 cents to $1.00 per share.

Our recommendation on the stock is Neutral.

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(PG) Procter & Gamble Shares Tumble – lost market share to its competitors

Company Description

Kimberly Clark, together with its subsidiaries, manufactures and markets health and hygiene products worldwide. The company was founded in 1872 and has a market cap of $24 billion.

Kimberly Clark took a beating last year in the weak market, but has rebounded very nicely over the last 3 months with the market, helped by solid second-quarter results, reported on July 23.

Second-Quarter Results

Sales were down 6% from last year to $4.73 billion, but earnings came in 17 cents ahead of the Zacks Consensus Estimate at $1.16 per share.

The company said that its results were helped by higher prices for its products and lower energy prices. Kimberly Clark did mention however that private label competitors have effected the landscape as value driven consumers hunt for bargains.

Estimates Advance

Since the solid quarter, analysts have raised their estimates, with the current year up 10 cents in the last 7 days to $4.21 per share. The next-year estimate is pegged at $4.86, a 15% growth projection.

Valuation

Based upon the current-year estimates, this stock has a P/E multiple of 13.5X, a discount to the overall market with a very nice growth projection.

The Chart

Shares of KMB have rebounded nicely after slumping late last year, up more 50% in just the last 3 months. Take a look below.

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(KMB) Kimberly Clark Corporation – discount to the overall market with a very nice growth projection

Company Description

Estee Lauder, which manufactures and markets skin care, makeup, fragrance and hair care products, is the pre-eminent global leader in prestige beauty. The company has strong brands, market presence, and growth potential demonstrated by over 60 years of uninterrupted sales growth.

Estee Lauder’s products are well-recognized brand names, including Estee Lauder, Aramis, Clinique, Prescriptives, Lab Series, Origins, M-A-C, Bobbi Brown, Tommy Hilfiger, La Mer, Donna Karan, Aveda, Jo Malone, Bumble and bumble, Darphin, Michael Kors, American Beauty, Flirt!, Good Skin, Grassroots, Sean John, Missoni, Daisy Fuentes, Tom Ford Beauty, Mustang, Coach and Ojon.

The products are sold worldwide through department stores, mass retailers, company-owned retail stores, hair salons, and travel-related establishments.

Bullish Forecasts

The company is seeing solid forecasts from analysts ahead of reporting next month for the fiscal fourth quarter and full year. For the current fiscal year, the average earnings estimate of $1.43 per share is 4% above the 3 months-ago level.

For the year ending June 2010, analysts are calling for earnings of $1.72 per share, versus the 3 months-ago projections of $1.64.

During the past couple months, analysts’ earnings forecasts have held steady at 20 cents per share.

The company is scheduled to release fourth-quarter and full-year results on August 13.

Shares Spiked on Third-quarter Results

Estee Lauder’s fiscal third quarter saw earnings of 16 cents per share, beating the consensus estimate by an astonishing 220%. Shares surged once the report came out and maintained the higher level fairly well, outperforming the market over the past 3 months.

Favorable Industry Comparisons

Estee Lauder offers a return on equity (ROE) of 22%, more than doubling the industry average of 9%. The company’s net profit margin of 5% is well ahead of a negative industry average. The earnings per share total is expected to grow 13% over the next 3 – 5 years, versus the industry average of 10%. The company also boasts an industry-leading dividend yield of 2%.

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$EL – solid forecasts from analysts ahead of reporting next month for the fiscal fourth quarter and full year.

Company Description

Procter & Gamble Company is a major household products and cosmetics company, which manufactures and markets over 300 brand name products in more than 160 countries. The company is well known for impressive product development capabilities, marketing prowess, and a strong global distribution network. Procter & Gamble s products enjoy strong brand name recognition.

In fiscal 2008, the company derived 44% of total revenue from North America, 30% from developing markets, 22% from Western Europe, and 4% from Northeast Asia.

Strong Results Reflect Quarterly Growth

On October 29, 2008, Procter & Gamble reported results for the first quarter of fiscal 2009 ending September 30, 2008. Quarterly earnings (excluding one-time items) were $1.03 per share, increasing 14.4% year-over-year from $0.90 per share reported in the year-ago quarter and topping the consensus estimate by 3%.

Net sales increased 9.0% year-over-year to $22.0 billion. Top line growth was comprised of strong unit volume growth (+2%), good pricing (+3%), and favorable currency translation (+5%). In addition, successful product launches, supported by marketing initiatives, contributed to sales growth during the quarter.

Some of the company‘s key brands (including Gillette, Fusion, Head & Shoulders, Cover Girl, Gain and SK-II) posted double-digit volume growth. Organic sales (which exclude the impact of acquisitions/divestitures and foreign exchange) increased 5%.

All three Global Business Units (GBU) performed well in the reported quarter: Beauty (+12%), Household Care (+10%), and Health and Well Being (+4%).

Rising Forecasts

In addition to having an outstanding record of positive surprises on earnings, the company is seeing bullish projections from Wall Street.

Analysts are calling for earnings of $4.29 per share for the year ending June 2009. Two months ago, the consensus estimate stood at $4.18.

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(PG) Procter & Gamble – Quarterly earnings increased 14.4% year-over-year

Nuevo-indices, like Estee Lauder’s (NYSE: EL) “lipstick index,” the bartender index or the video game index, all have their day in the sun during market downturns. Often they’re dismissed as distractions, or excuses for poor performance.

But their fundamentals are based on real consumer trends and psychology.

Areas like entertainment, clothing and luxury items are often cut back during downturns. But that doesn’t mean they aren’t replaced with substitutes. Frugal doesn’t mean spendthrift. Consumers are still buying.

Purchases are justified by their reduced cost, or the “savings” from not spending money elsewhere. Entertainment like Netflix (Nasdaq: NFLX) carries a cost – but nothing like going to a movie three times a week. It’s this mentality that we can find profits in.

Many companies have benefited from cost-conscious shoppers and savers, and others are benefiting from negative psychology.

Kraft Foods (NYSE: KFT) and General Mills (NYSE: GIS), for example, are profiting from demand for comfort foods and a falling cost of goods.

In fact, discount retailers like Wal-Mart (NYSE: WMT) and Dollar Tree (Nasdaq: DLTR) have actually increased their sales projections.

When the market turns trading and investing rules upside-down, like it has over the past nine months, it’s nice to know that some habits can be counted on. And who knows? Tomorrow you could be hearing about the “Netflix Index” as the newest economic gauge.

Companies mentioned in this article: EL, NFLX, KFT, GIS, WMT and DLTR.

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(EL) NFLX: The Netflix Index

Company Description

Parlux Fragrances is a Florida-based manufacturer of designer fragrances under the brands of Paris Hilton, Jessica Simpson, GUESS?, Nicole Miller, Natori, Queen Latifah, XOXO, Ocean Pacific (OP), Andy Roddick, and Fred Hayman Beverly Hills. The company also has licenses for Paris Hilton watches, cosmetics, sunglasses, handbags and small leather accessories.

Parlux, a Zacks #1 Rank (strong buy), distributes its products in the U.S. through department and specialty stores and internationally to more than 90 countries through department stores and perfumeries.

Recent Events

The company just announced the signing of a worldwide licensing agreement with Marc Ecko Enterprises to develop and market a line of prestige fragrances for men and women.

Parlux management stated that Marc Ecko is the global leader in youth culture, adding that his hip lifestyle brand is remarkably exciting and always innovative. “With the Marc Ecko addition to our fragrance portfolio, Parlux Fragrances, Inc. will target yet another consumer group,” said Neil Katz, Chairman and CEO of Parlux Fragrances. “We see Marc Ecko’s appeal as worldwide and a key part of our strategic plan. We believe Parlux is setting in motion dynamic initiatives by introducing brands that will appeal to a diverse and broad audience of consumers.”

Robust Quarterly Results

Parlux Fragrances saw a solid fiscal second quarter. Earnings per share of 17 cents surpassed the year-prior 10 cents. Sales grew 40% on a year-over-year basis.

Consensus Estimates are on the Rise

Analysts are calling for earnings of 32 cents per share for the year ending March 2009. Three months ago, the consensus estimate was at 28 cents per share.

Value Fundamentals

The company has no debt and offers an attractive forward P/E ratio of 7. The company’s price-to-book is at 0.62, well below the industry average of 1.3.

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(PARL) Parlux Fragrances – Sales grew 40% on a year-over-year basis