We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Why Is P&G (PG) Up 16.9% Since Last Earnings Report?
Read MoreHide Full Article
A month has gone by since the last earnings report for Procter & Gamble (PG - Free Report) . Shares have added about 16.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is P&G due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
P&G Beats on Q1 Earnings & Revenue Estimates
Procter & Gamble, popularly known as P&G, reported first-quarter fiscal 2019 results, wherein both top and bottom lines came ahead of the Zacks Consensus Estimate, with the latter marking its 14th straight beat. Also, earnings improved year over year though sales remained flat, largely due to adverse currency fluctuations – which acted as a major deterrent in the first quarter.
P&G’s core earnings for the first quarter came in at $1.12 per share, which rose 3% year over year and beat the Zacks Consensus Estimate of $1.09. The upside was primarily driven by benefits from tax reforms, somewhat negated by a lower operating margin. Currency-neutral core earnings per share (EPS) improved 11%.
Sales in Detail
P&G’s reported net sales of $16,690 million, which came above the Zacks Consensus Estimate of $16,558 million. However, the top line remained nearly flat year over year and was hurt by currency fluctuations to the tune of about 3%.
Organically (excluding the impact of acquisitions, divestitures and foreign exchange), revenues grew 4% on the back of 3% growth in shipment volumes. Further, organic sales were fueled by favorable mix, whereas pricing remained neutral. Notably, most of the business segments reported organic sales growth.
In the reported quarter, Beauty and Fabric & Home Care segments registered organic sales growth of 7% and 5%, respectively. Organic sales went up 4% each at Grooming and Health Care divisions. On the other hand, organic sales for the Baby, Feminine & Family Care segment dipped 1%.
Net sales for Beauty and Fabric & Home Care segments grew 5% and 2%, respectively. However, net sales declined 1% at Grooming and 3% each for Health Care, and Baby, Feminine & Family Care segments.
Margins
Core gross margin decreased 150 basis points (bps) to 49.4%, including nearly 60 bps adverse impact from currency headwinds. On a currency-neutral basis, core gross margin contracted 90 bps due to headwinds such as increased commodity costs, unfavorable mix, investments associated with innovation and capacity start-ups and other impacts. This was somewhat cushioned by gains from productivity savings.
Core selling, general and administrative expense (SG&A) decreased 80 bps (as a percentage of sales) to 27.7%. Currency-neutral core SG&A costs declined 150 bps driven by savings from overheads and advertising production cost productivity among others as well as impacts of sales leverage.
Core operating margin decreased 80 bps year over year to 21.7%, while currency-neutral core operating profit margin expanded 50 bps.
Financials
The company ended the quarter with cash and cash equivalents of $2,545 million, long-term debt was $20,779 million and total shareholders’ equity of $52,504 million.
Cash flow from operating activities amounted to $3,567 million for the first quarter and adjusted free cash flow productivity was 95%.
During the quarter, the company returned nearly $3.1 billion to stockholders through dividend payments worth $1.9 billion and share buybacks of roughly $1.3 billion.
For fiscal 2019, the company guided adjusted free cash flow productivity of 90% or better. During the fiscal, the company expects to return cash to shareholders, including more than $7 billion of dividends and up to $5 billion of share repurchases.
Fiscal 2019 Guidance
Given solid consumption, organic volumes and organic sales in the first quarter, P&G remains on track to meet its sales and earnings goals for fiscal 2019.
The company reiterated its organic sales growth guidance for fiscal 2019, projecting it in a range of 2-3%. However, P&G now expects all-in sales growth to range between down 2% and flat. The sales guidance includes an estimated 3 headwind from foreign currency, while acquisitions & divestitures are also likely to have a modest effect on all-in sales growth. Earlier, management expected all-in sales growth to be nearly flat to up 1% in fiscal 2019.
The company continues to anticipate core EPS growth of 3-8% in fiscal 2019 compared with fiscal 2018 core earnings of $4.22 per share. Earnings guidance includes an adverse impact of close to $1.3 billion from foreign currency and escalated commodity expenses. On a currency-neutral basis, core EPS growth is estimated in a band of 11.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month.
VGM Scores
At this time, P&G has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
P&G has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Why Is P&G (PG) Up 16.9% Since Last Earnings Report?
A month has gone by since the last earnings report for Procter & Gamble (PG - Free Report) . Shares have added about 16.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is P&G due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
P&G Beats on Q1 Earnings & Revenue Estimates
Procter & Gamble, popularly known as P&G, reported first-quarter fiscal 2019 results, wherein both top and bottom lines came ahead of the Zacks Consensus Estimate, with the latter marking its 14th straight beat. Also, earnings improved year over year though sales remained flat, largely due to adverse currency fluctuations – which acted as a major deterrent in the first quarter.
P&G’s core earnings for the first quarter came in at $1.12 per share, which rose 3% year over year and beat the Zacks Consensus Estimate of $1.09. The upside was primarily driven by benefits from tax reforms, somewhat negated by a lower operating margin. Currency-neutral core earnings per share (EPS) improved 11%.
Sales in Detail
P&G’s reported net sales of $16,690 million, which came above the Zacks Consensus Estimate of $16,558 million. However, the top line remained nearly flat year over year and was hurt by currency fluctuations to the tune of about 3%.
Organically (excluding the impact of acquisitions, divestitures and foreign exchange), revenues grew 4% on the back of 3% growth in shipment volumes. Further, organic sales were fueled by favorable mix, whereas pricing remained neutral. Notably, most of the business segments reported organic sales growth.
In the reported quarter, Beauty and Fabric & Home Care segments registered organic sales growth of 7% and 5%, respectively. Organic sales went up 4% each at Grooming and Health Care divisions. On the other hand, organic sales for the Baby, Feminine & Family Care segment dipped 1%.
Net sales for Beauty and Fabric & Home Care segments grew 5% and 2%, respectively. However, net sales declined 1% at Grooming and 3% each for Health Care, and Baby, Feminine & Family Care segments.
Margins
Core gross margin decreased 150 basis points (bps) to 49.4%, including nearly 60 bps adverse impact from currency headwinds. On a currency-neutral basis, core gross margin contracted 90 bps due to headwinds such as increased commodity costs, unfavorable mix, investments associated with innovation and capacity start-ups and other impacts. This was somewhat cushioned by gains from productivity savings.
Core selling, general and administrative expense (SG&A) decreased 80 bps (as a percentage of sales) to 27.7%. Currency-neutral core SG&A costs declined 150 bps driven by savings from overheads and advertising production cost productivity among others as well as impacts of sales leverage.
Core operating margin decreased 80 bps year over year to 21.7%, while currency-neutral core operating profit margin expanded 50 bps.
Financials
The company ended the quarter with cash and cash equivalents of $2,545 million, long-term debt was $20,779 million and total shareholders’ equity of $52,504 million.
Cash flow from operating activities amounted to $3,567 million for the first quarter and adjusted free cash flow productivity was 95%.
During the quarter, the company returned nearly $3.1 billion to stockholders through dividend payments worth $1.9 billion and share buybacks of roughly $1.3 billion.
For fiscal 2019, the company guided adjusted free cash flow productivity of 90% or better. During the fiscal, the company expects to return cash to shareholders, including more than $7 billion of dividends and up to $5 billion of share repurchases.
Fiscal 2019 Guidance
Given solid consumption, organic volumes and organic sales in the first quarter, P&G remains on track to meet its sales and earnings goals for fiscal 2019.
The company reiterated its organic sales growth guidance for fiscal 2019, projecting it in a range of 2-3%. However, P&G now expects all-in sales growth to range between down 2% and flat. The sales guidance includes an estimated 3 headwind from foreign currency, while acquisitions & divestitures are also likely to have a modest effect on all-in sales growth. Earlier, management expected all-in sales growth to be nearly flat to up 1% in fiscal 2019.
The company continues to anticipate core EPS growth of 3-8% in fiscal 2019 compared with fiscal 2018 core earnings of $4.22 per share. Earnings guidance includes an adverse impact of close to $1.3 billion from foreign currency and escalated commodity expenses. On a currency-neutral basis, core EPS growth is estimated in a band of 11.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month.
VGM Scores
At this time, P&G has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
P&G has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.