On Wednesday, Procter & Gamble (NYSE:PG) will release its latest quarterly results. The key to making smart investment decisions on stocks reporting earnings is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever surprises inevitably arise. That way, you'll be less likely to have an uninformed, knee-jerk reaction that turns out to be exactly the wrong move.

One of the peculiarities of the Dow Jones Industrial Average's(DJINDICES:^DJI) bull run is that many of its more defensive components have participated in the rally. Procter & Gamble has soared to new highs recently as investors have overlooked some of its shortcomings and gravitated toward its healthy dividend yield and reputation for stability. Let's take an early look at what's been happening with Procter & Gamble over the past quarter and what we're likely to see in its quarterly report.

Stats on Procter & Gamble

Analyst EPS Estimate


Change From Year-Ago EPS


Revenue Estimate

$20.74 billion

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance.

How will Procter & Gamble fare this quarter?
Analysts have become more bullish in recent months on P&G's earnings prospects, raising their estimates for the most recent quarter by a penny per share and boosting their full-year fiscal 2013 EPS calls by $0.08. The stock has performed impressively, rising 17% since mid-January.

Procter & Gamble has taken a big step forward this quarter. Until recently, investors worried about P&G's lack of strong growth, blaming a lack of innovation for the company's lagging behind competitors. Unilever (NYSE:UL) has managed to grow its revenue at a 7% annual pace over the past four years, while P&G has posted growth at only a third that pace over the past three years following a revenue decline in fiscal 2009.

Yet last quarter's unexpected sign of strength turned the stock around. Core earnings grew by double-digit percentages as lower costs and product price hikes added to the positive impact of rising sales volumes and market share. Moreover, with P&G expecting to release new products in the second half of 2013, investors hope innovation will return and help the company sustain its growth.

One sign of strength for P&G is its continuing streak of rising dividends, which the company extended earlier this month when it boosted its payout by 7%. The increase marked the 57th consecutive year that the company raised its dividend.

One concern, though, is how the company handled news of Venezuela's currency devaluation. Clorox (NYSE:CLX) and Colgate-Palmolive (NYSE:CL) also felt the pinch, with Clorox taking about a $0.05 to $0.10 per-share earnings hit and Colgate losing about $0.50 per share. But they also addressed the potential devaluation more proactively than P&G did. Clorox actually anticipated the devaluation in its February earnings report, projecting the potential hit if a devaluation took place. Colgate didn't provide specific guidance in advance but clearly saw it as an issue, delivering on a promise to give prompt guidance revisions after the devaluation occurred.

In Procter & Gamble's earnings report, watch for how well the company is able to follow through on last quarter's growth. If P&G's old complacency starts slipping back into its results, then the stock could easily start lagging behind its peers once again.

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Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool recommends Procter & Gamble and Unilever. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.