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Consumer goods giant Procter and Gamble (PGFree Procter and Gamble Stock Report) issued fiscal second-quarter (ended December 31st) results. Core earnings grew 5% year over year, to $1.25 a share, hitting our target on the nose. Net sales were flat, at $17.4 billion, and were also in line with our expectations. Investors seemed pleased with the earnings report, and the stock was up modestly in early morning trading.

Organic sales, which exclude the impact of acquisitions, divestitures, and foreign exchange fluctuations, were up 4% for the December quarter. Likewise, excluding those factors from the bottom line, currency-neutral core EPS increased 13% for the interim. A lower stock base and the U.S. Tax Act boosted share profits.

To review, over the last few years, P&G had been hard hit by a difficult foreign currency environment (the strength of the U.S. dollar eroded much of the gains from overseas markets). And the company restructured its organization to help stave off the negative impact.

Looking ahead, Procter & Gamble may well face a challenging operating environment in the coming months. But, we believe ongoing restructuring and productivity improvements will temper operating headwinds. To wit, the company may realign its assets to bolster margins and will likely use cost savings to strengthen its operations.

The company should continue to invest in its brands, specifically in product innovation. Stronger merchandising efforts and marketing campaigns may help it gain market share. Too, a growing e-commerce segment ought to expand its footprint. Meanwhile, better pricing initiatives and improving shipment volume and distribution should spur the top line.

P&G has been rewarding its shareholders, and plans to pay $7 billion in dividends and repurchase up to $5 billion in common stock.

Management is optimistic that these moves will be accretive to its financial results in the near term. For fiscal 2019, the company raised its organic sales guidance by a percentage point. However, P&G anticipates total revenues will come in between -1% and +1% of the fiscal 2018 figure, and looks for core earnings to advance in the 3%-8% range. As a result, we are maintaining our current full-year estimates. We think share net will increase at a mid- to upper-single-digit clip, to $4.50, on net sales of $67.5 billion, a roughly flat comparison.

The Dow-30 component has a lot of conservative appeal. The mature company's defensive characteristics underscore its slow-and-steady growth. Plus, PG stock offers an attractive dividend yield and holds good risk-adjusted total return possibilities.

About The Company: The Procter & Gamble Company makes detergents, soaps, toiletries, foods, paper, & industrial products. Brands include: Head & Shoulders, Olay, Pantene, SK-II, Wella, Fusion, Gillette, Mach 3, Presobarba, Crest, Oral-B, Vicks, Ariel, Dawn, Downy, Febreze, Gain, Tide, Always, Bounty, Charmin, and Pampers.

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