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Procter & Gamble (PG) Sales Remain Low: Should You Dump?
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On Dec 29, we issued an updated research report on The Procter & Gamble Company (PG - Free Report) – a branded consumer products company which has presence in more than 180 countries.
Procter & Gamble has been struggling to boost sales over the past few quarters. Significant negative foreign exchange impact, weak volumes, divestures and slowing market growth have been impacting sales.
Moreover, the company’s current quarter has seen seven estimates go south over the last two months compared to no estimate moving higher, while the current year estimate has seen five downward revisions and none upwards in the same time period. The consensus estimates have dipped for the current quarter and year by 0.9% and 0.5%, respectively, justifying the Zacks Rank #4 (Sell).
Procter & Gamble operates in a challenging and volatile macro environment. Market growth rates have been persistently decelerating, mainly due to slow growth in developing markets, which is in turn hurting sales.
Procter & Gamble has been struggling over the past few quarters to boost market growth. The company’s market share growth trends in developing markets constituted around 35% of its global sales as of fiscal 2016, down from 38% recorded in fiscal 2015. In fact, the company lost global market share in four of its five reporting segments in the first quarter of 2017.
Foreign exchange is a major headwind for the company with around 60% of the business coming from outside North America. Foreign exchange hurt the company’s revenues by 2% in fiscal 2014 and 2013 and 6% in fiscal 2015 and 2016.
However, Procter & Gamble’s five-year productivity and cost savings plan to reduce spending across all areas is encouraging. Including divestitures, the company expects to reduce non-manufacturing or overhead roles by about 35% by the end of fiscal 2017.
Though Procter & Gamble expects core earnings to grow in mid-single digits in fiscal 2017 as against the fiscal 2016 core earnings of $3.67 per share, the combined foreign exchange headwind and minor brand divestitures are likely to reduce sales by about 1 percentage points in 2017.
Key Picks
Better-ranked stocks in the consumer staples sector include B&G Foods, Inc. (BGS - Free Report) , Dean Foods Company and Lancaster Colony Corporation (LANC - Free Report) .
For full-year 2016, B&G Foods’ EPS is expected to grow 42.2%.
Dean Foods’ 2016 EPS is expected to improve 31.3% in 2016.
Lancaster’s – a Zacks Rank #2 (Buy) stock – earnings are expected to grow 8.4% in fiscal 2017.
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Procter & Gamble (PG) Sales Remain Low: Should You Dump?
On Dec 29, we issued an updated research report on The Procter & Gamble Company (PG - Free Report) – a branded consumer products company which has presence in more than 180 countries.
Procter & Gamble has been struggling to boost sales over the past few quarters. Significant negative foreign exchange impact, weak volumes, divestures and slowing market growth have been impacting sales.
Moreover, the company’s current quarter has seen seven estimates go south over the last two months compared to no estimate moving higher, while the current year estimate has seen five downward revisions and none upwards in the same time period. The consensus estimates have dipped for the current quarter and year by 0.9% and 0.5%, respectively, justifying the Zacks Rank #4 (Sell).
Procter & Gamble operates in a challenging and volatile macro environment. Market growth rates have been persistently decelerating, mainly due to slow growth in developing markets, which is in turn hurting sales.
Procter & Gamble has been struggling over the past few quarters to boost market growth. The company’s market share growth trends in developing markets constituted around 35% of its global sales as of fiscal 2016, down from 38% recorded in fiscal 2015. In fact, the company lost global market share in four of its five reporting segments in the first quarter of 2017.
Foreign exchange is a major headwind for the company with around 60% of the business coming from outside North America. Foreign exchange hurt the company’s revenues by 2% in fiscal 2014 and 2013 and 6% in fiscal 2015 and 2016.
However, Procter & Gamble’s five-year productivity and cost savings plan to reduce spending across all areas is encouraging. Including divestitures, the company expects to reduce non-manufacturing or overhead roles by about 35% by the end of fiscal 2017.
Though Procter & Gamble expects core earnings to grow in mid-single digits in fiscal 2017 as against the fiscal 2016 core earnings of $3.67 per share, the combined foreign exchange headwind and minor brand divestitures are likely to reduce sales by about 1 percentage points in 2017.
Key Picks
Better-ranked stocks in the consumer staples sector include B&G Foods, Inc. (BGS - Free Report) , Dean Foods Company and Lancaster Colony Corporation (LANC - Free Report) .
B&G Foods and Dean Foods sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
For full-year 2016, B&G Foods’ EPS is expected to grow 42.2%.
Dean Foods’ 2016 EPS is expected to improve 31.3% in 2016.
Lancaster’s – a Zacks Rank #2 (Buy) stock – earnings are expected to grow 8.4% in fiscal 2017.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>