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Branded consumer packaged goods maker Procter & Gamble, (PG - Free Procter & Gamble Stock Report) which is also a Dow-30 component, has announced first-quarter (fiscal year ends June 30th) results that bested both our and Wall Street's expectations by a handsome margin. On the strength of this news, PG shares were up more than 2% in early trading.

Revenues for the interim summed to just north of $20.7 billion. We were anticipating something closer to $20.5 billion. This figure still represents a year-over-year decline of 3.6%, but the investment community will likely be enthused by the amount, as macroeconomic conditions are far from ideal. Plus, a number of Procter's blue-chip brethren have already come out with sizable shortfalls on the revenue line during this reporting period. Add to this negative currency exchanges stemming from a strengthening U.S. dollar and the tally looks much more impressive. With that, we look for organic sales growth in the range of 1% to 3% in the December quarter with roughly half of that figure being eroded by foreign currency swaps. 

Sales across a number of the company's product lines are struggling to regain positive traction during these difficult times. Still, baby care/family care and fabric care/home care have shown some signs of life lately. The former is benefiting from an improved pricing and product mix, and penetration of new items like Tide Pods is going well. Too, staples like Cascade, Dawn and Febreze remain in high demand. Speaking to the latter, higher pricing and gains in developing markets have been a boon. New innovations on established lines like Charmin and Bounty receive the credit there. 

Share net for the period came in at $1.06, a dime ahead of the expected consensus. A combination of increased pricing and reduced manufacturing costs drove the solid performance. On the heels of the improved earnings we are adding two cents to our December- quarter EPS expectation, which now sits at $1.10. Furthermore, for the full fiscal 2013 we now envision PG earning $4.00 a share, a 3% increase from our initial call. Some investors may not be pleased with annual gains of just under 4%, but we view this as a positive step, especially when considering that earnings contracted in fiscal 2012. 

Stepping away from the actual numbers, many of the headlines surrounding this company of late have to do with the pressure being placed on PG's top brass from activist investor William Ackman. Recall that in July Mr. Ackman took a $1.8 billion stake in the company and has pushed for change from that moment forth. Chief Executive Officer Bob McDonald has felt the heat the most, with some reports stating that if Mr. Ackman got his way he would replace Mr. McDonald. Regardless, the embattled CEO has put a turnaround plan in place to spark results and initial indications are that it is working. The primary goal is to recapture market share in key categories. Detergents were highlighted as a vital area. In that vein, P&G said it held or gained market share in categories representing more than 45% of sales in the quarter. Here in the States, that figure rose to 60%. On top of this initiative, the plan calls for $10 billion in expense trimming through 2016. This goal is lofty, but the company has shown its ability to reduce costs in the past so we would not bet against management on this front. Finally, the spurring of innovation will once again be pushed to the forefront. Throughout its history, Procter & Gamble has been known for its breakout products that took the market by storm. Of late, this type of item has not been as commonplace. Product development efforts have been stepped up and the general belief is that the beauty segment is the best subsector to capitalize on.  

Even with some current issues regarding top-line levels, this blue-chip stock should be a worthwhile investment for a broad range of accounts. Those with a conservative bent will like its top notch Safety rank (1: Highest) and perfect (100) score for Earnings Predictability. Moreover, investors seeking income will enjoy this equity's well covered and growing payout. At current levels, the dividend is well ahead of the Value Line median. Too, we are behind the company in its restructuring efforts and think the fruits of this labor will be clearly visible over the pull to 2015-2017. Therefore, no one should be hesitant to jump on board for the long term.

About The Company:The Procter & Gamble Company makes detergents, soaps, toiletries, foods, paper, & industrial products. Brands include: Always, Head & Shoulders, Olay, Pantene, Wella, Actonel, Dawn, Downy, Tide, Bounty, Charmin, Pampers, Folgers, Iams, Pringles, Gillette, MACH3, Braun, and Duracell. Acquired Gillette in October, 2005, and divested Folgers in June, 2009. U.S. sales accounted for 37% of total revenues last fiscal year, while Wal-Mart Stores (WMTFree Wal-Mart Stock Report) accounted for 15%.

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.