We expect Perrigo Company plc PRGO to beat expectations when it reports fourth-quarter and full-year results on Mar 1. In the last-reported quarter, the company delivered a negative earnings surprise of 30.77%.

Perrigo’s earnings performance has been dismal over the trailing four quarters. The company’s earnings missed estimates in all the last four quarters, delivering an average negative earnings surprise of 16.86%.

Shares of Perrigo have declined 12.4% in the past year compared with the industry’s decrease of 19.5%.

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Factors at Play

In the fourth quarter, the performance of Perrigo’s Consumer Self Care Americas (“CSCA”) and Consumer Self Care International (“CSCI”) segments is expected to have been aided by the products added through acquisitions. Significant sales growth of new products is likely to have boosted sales further during the soon-to-be-reported quarter.

Sales of cough/cold products had demonstrated strong recovery during the third quarter. It remains to be seen if the recovery in sales of these products continued during the fourth quarter amid high COVID-19 infection cases in many countries, including the United States and Europe, due to the Omicron variant.

The impact of COVID-19 has been favorable for products other than cough and cold. During the fourth quarter, sales of Perrigo’s products are likely to have benefited on the back of strong consumer takeaway across majority of businesses.

Meanwhile, supply chain disruptions in the United States and product recalls are likely to have hurt sales growth during the soon-to-be reported quarter. Loss of sales due to discontinued products and the exited businesses might have partially offset the gain from the new products.

The unfavorable impact of the rise in input costs and supply chain disruptions are likely to have hurt the bottom line.

Investors are likely to ask questions on potential product launches in 2022 and provide an update on the expected impact of COVID-19 in 2022.

Earnings Whispers

Our proven model predicts an earnings beat for Perrigo this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate (59 cents per share) and the Zacks Consensus Estimate (56 cents per share), is +4.73%.

Zacks Rank: Perrigo carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.