The Procter & Gamble Company’s (PG - Free Report) , popularly known as P&G, second-quarter fiscal 2017 earnings and revenues exceeded expectations.
P&G’s fiscal second-quarter adjusted earnings of $1.08 per share beat the Zacks Consensus Estimate of $1.06 by 1.9%. The bottom line also increased 3.8% from the prior-year quarter on higher margins. Currency-neutral core EPS per share improved 9%.
Sales in Details
P&G’s reported net sales of $16.86 billion beat the Zacks Consensus Estimate of $16.8 billion by 0.3%. The top line, however, remained unchanged year over year. Foreign exchange had a negative impact of 2% on sales.
Organically (excluding the impact of acquisitions, divestitures and foreign exchange), revenues grew 2% on the back of a 2% increase in organic volumes.
All the five business segments recorded positive organic sales growth. The Health Care segment reported 7% growth in the quarter. The Beauty segment witnessed 3% organic sales growth whereas Grooming, Fabric & Home Care Baby, as well as Feminine & Family Care segments reported 1% growth, respectively.
Rising Margins
Core gross margin expanded 70 basis points (bps) to 51.5% as productivity cost savings and higher volume benefits were offset by headwinds like unfavorable mix and commodity cost increases.
Core selling, general and administrative expense (SG&A) margin rose 70 bps (as a percentage of sales) to 28% as productivity savings were partly offset by higher investments. Core operating margin remained flat year over year.
P&G has undertaken an aggressive cost-cutting plan to reduce spending across all areas like supply chain, research & development, marketing and overheads.
Financials
As of Dec 31, 2016, the company’s cash and cash equivalents were $6,051 million, down from $7,102 million at the end of fiscal 2016 (as of Jun 30, 2016). Long-term debt was $16,460 million as of Dec 31, 2016, down from $18,945 million at fiscal 2016-end.
Cash flow from operating activities were $3,000 million during the quarter, down from $4,480 million a year ago. Adjusted free cash flow was $2,384 million in the second quarter, down from $3,789 million a year-ago.
Fiscal 2017 Guidance
The Cincinnati-based company raised its organic sales growth projection to a range of about 2–3% from 2% projected earlier for fiscal 2017. However, the company now expects the combined foreign exchange headwind and minor brand divestitures to reduce sales by about 2–3% (earlier 1%). Hence, P&G expects all-in sales growth to remain flat (1% earlier) for fiscal 2017.
The core earnings per share growth projection is maintained in the mid-single digit range as compared with fiscal 2016 core earnings of $3.67 per share.
P&G carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Upcoming Peer Releases
Colgate-Palmolive Co. (CL - Free Report) is slated to release its quarterly numbers on Jan 27. The Zacks Consensus Estimate for earnings is pegged at 75 cents.
The Clorox Company (CLX - Free Report) is scheduled to release its quarterly numbers on Feb 3. The Zacks Consensus Estimate for the bottom line stands at $1.23.
Church & Dwight Co. Inc. (CHD - Free Report) is slated to release its quarterly numbers on Feb 7. The Zacks Consensus Estimate for earnings is pegged at 43 cents.
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The Procter & Gamble Company’s (PG - Free Report) , popularly known as P&G, second-quarter fiscal 2017 earnings and revenues exceeded expectations.
P&G’s fiscal second-quarter adjusted earnings of $1.08 per share beat the Zacks Consensus Estimate of $1.06 by 1.9%. The bottom line also increased 3.8% from the prior-year quarter on higher margins. Currency-neutral core EPS per share improved 9%.
Sales in Details
P&G’s reported net sales of $16.86 billion beat the Zacks Consensus Estimate of $16.8 billion by 0.3%. The top line, however, remained unchanged year over year. Foreign exchange had a negative impact of 2% on sales.
Organically (excluding the impact of acquisitions, divestitures and foreign exchange), revenues grew 2% on the back of a 2% increase in organic volumes.
All the five business segments recorded positive organic sales growth. The Health Care segment reported 7% growth in the quarter. The Beauty segment witnessed 3% organic sales growth whereas Grooming, Fabric & Home Care Baby, as well as Feminine & Family Care segments reported 1% growth, respectively.
Rising Margins
Core gross margin expanded 70 basis points (bps) to 51.5% as productivity cost savings and higher volume benefits were offset by headwinds like unfavorable mix and commodity cost increases.
Core selling, general and administrative expense (SG&A) margin rose 70 bps (as a percentage of sales) to 28% as productivity savings were partly offset by higher investments. Core operating margin remained flat year over year.
P&G has undertaken an aggressive cost-cutting plan to reduce spending across all areas like supply chain, research & development, marketing and overheads.
Financials
As of Dec 31, 2016, the company’s cash and cash equivalents were $6,051 million, down from $7,102 million at the end of fiscal 2016 (as of Jun 30, 2016). Long-term debt was $16,460 million as of Dec 31, 2016, down from $18,945 million at fiscal 2016-end.
Cash flow from operating activities were $3,000 million during the quarter, down from $4,480 million a year ago. Adjusted free cash flow was $2,384 million in the second quarter, down from $3,789 million a year-ago.
Fiscal 2017 Guidance
The Cincinnati-based company raised its organic sales growth projection to a range of about 2–3% from 2% projected earlier for fiscal 2017. However, the company now expects the combined foreign exchange headwind and minor brand divestitures to reduce sales by about 2–3% (earlier 1%). Hence, P&G expects all-in sales growth to remain flat (1% earlier) for fiscal 2017.
The core earnings per share growth projection is maintained in the mid-single digit range as compared with fiscal 2016 core earnings of $3.67 per share.
P&G carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Upcoming Peer Releases
Colgate-Palmolive Co. (CL - Free Report) is slated to release its quarterly numbers on Jan 27. The Zacks Consensus Estimate for earnings is pegged at 75 cents.
The Clorox Company (CLX - Free Report) is scheduled to release its quarterly numbers on Feb 3. The Zacks Consensus Estimate for the bottom line stands at $1.23.
Church & Dwight Co. Inc. (CHD - Free Report) is slated to release its quarterly numbers on Feb 7. The Zacks Consensus Estimate for earnings is pegged at 43 cents.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 ""Strong Buy"" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 ""Strong Sells"" and other private research. See these stocks free >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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