The Procter & Gamble Company (PG - Free Report) , popularly known as P&G, reported third-quarter fiscal 2017 financial results, wherein earnings exceeded expectations, while revenues missed the same.
The company’s results were affected by market slowdown, continued geopolitical disruptions and foreign exchange challenges.
P&G’s fiscal third-quarter adjusted earnings of 96 cents per share beat the Zacks Consensus Estimate of 94 cents by 2.1%. The bottom line also increased 12% from the prior-year quarter. Currency-neutral core earnings per share (EPS) improved 15%.
Sales in Details
P&G’s reported net sales of $15.61 billion missed the Zacks Consensus Estimate of $15.71 billion by 0.7%. The top line also declined 1% 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 1% on the back of a 1% increase in organic volumes.
Of the five business segments, four recorded positive organic sales growth. The Health Care segment reported the highest growth of 6% in the quarter in the group. The Beauty segment, Fabric & Home Care, as well as Baby, Feminine & Family Care segments reported 1% growth, respectively. The Grooming segment, on the other hand, posted 6% organic sales decline.
Rising Margins
Core gross margin decreased 40 basis points (bps) to 50.5% as productivity cost were more than offset by headwinds like unfavorable geographic and product mix.
Core selling, general and administrative expense (SG&A) margin decreased 30 bps (as a percentage of sales) to 28.4% as productivity savings were more than offset by higher investments. Core operating margin also decreased 10 bps year over year.
P&G has been cutting costs aggressively to reduce spending across all areas like supply chain, research & development, marketing and overheads.
Financials
As of Mar 31, 2017, the company’s cash and cash equivalents were $5,817 million, down from $7,102 million at the end of fiscal 2016 (as of Jun 30, 2016). Long-term debt was $16,633 million as of Mar 31, 2011, down from $18,945 million at the end of fiscal 2016.
Cash flow from operating activities was $9,065 million during the first nine months of fiscal 2017, down from $11,296 million a year ago.
Fiscal 2017 Guidance
The Cincinnati, OH-based company maintained its organic sales growth projection in the range of 2–3% for fiscal 2017. However, the company expects the combined foreign exchange headwind and minor brand divestitures to lower sales by 2–3%. Hence, P&G expects all-in sales growth to remain down 1% to flat (earlier flat) for fiscal 2017.
The core earnings per share growth projection is maintained in the mid-single digit range compared with fiscal 2016 core earnings of $3.67 per share.
The company has increased its guidance for adjusted free cash flow productivity from 90% to approximately 95% for the fiscal year.
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 Apr 28. The Zacks Consensus Estimate for earnings is pegged at 66 cents.
The Clorox Company (CLX - Free Report) is scheduled to release its quarterly numbers on May 3. The Zacks Consensus Estimate for the bottom line stands at $1.30.
Church & Dwight Co. Inc. (CHD - Free Report) is slated to release its quarterly numbers on May 4. The Zacks Consensus Estimate for earnings is pegged at 46 cents.
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The Procter & Gamble Company (PG - Free Report) , popularly known as P&G, reported third-quarter fiscal 2017 financial results, wherein earnings exceeded expectations, while revenues missed the same.
The company’s results were affected by market slowdown, continued geopolitical disruptions and foreign exchange challenges.
P&G’s fiscal third-quarter adjusted earnings of 96 cents per share beat the Zacks Consensus Estimate of 94 cents by 2.1%. The bottom line also increased 12% from the prior-year quarter. Currency-neutral core earnings per share (EPS) improved 15%.
Sales in Details
P&G’s reported net sales of $15.61 billion missed the Zacks Consensus Estimate of $15.71 billion by 0.7%. The top line also declined 1% 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 1% on the back of a 1% increase in organic volumes.
Of the five business segments, four recorded positive organic sales growth. The Health Care segment reported the highest growth of 6% in the quarter in the group. The Beauty segment, Fabric & Home Care, as well as Baby, Feminine & Family Care segments reported 1% growth, respectively. The Grooming segment, on the other hand, posted 6% organic sales decline.
Rising Margins
Core gross margin decreased 40 basis points (bps) to 50.5% as productivity cost were more than offset by headwinds like unfavorable geographic and product mix.
Core selling, general and administrative expense (SG&A) margin decreased 30 bps (as a percentage of sales) to 28.4% as productivity savings were more than offset by higher investments. Core operating margin also decreased 10 bps year over year.
P&G has been cutting costs aggressively to reduce spending across all areas like supply chain, research & development, marketing and overheads.
Financials
As of Mar 31, 2017, the company’s cash and cash equivalents were $5,817 million, down from $7,102 million at the end of fiscal 2016 (as of Jun 30, 2016). Long-term debt was $16,633 million as of Mar 31, 2011, down from $18,945 million at the end of fiscal 2016.
Cash flow from operating activities was $9,065 million during the first nine months of fiscal 2017, down from $11,296 million a year ago.
Fiscal 2017 Guidance
The Cincinnati, OH-based company maintained its organic sales growth projection in the range of 2–3% for fiscal 2017. However, the company expects the combined foreign exchange headwind and minor brand divestitures to lower sales by 2–3%. Hence, P&G expects all-in sales growth to remain down 1% to flat (earlier flat) for fiscal 2017.
The core earnings per share growth projection is maintained in the mid-single digit range compared with fiscal 2016 core earnings of $3.67 per share.
The company has increased its guidance for adjusted free cash flow productivity from 90% to approximately 95% for the fiscal year.
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 Apr 28. The Zacks Consensus Estimate for earnings is pegged at 66 cents.
The Clorox Company (CLX - Free Report) is scheduled to release its quarterly numbers on May 3. The Zacks Consensus Estimate for the bottom line stands at $1.30.
Church & Dwight Co. Inc. (CHD - Free Report) is slated to release its quarterly numbers on May 4. The Zacks Consensus Estimate for earnings is pegged at 46 cents.
Looking for Ideas with Even Greater Upside?
Today's investment ideas are short-term, directly based on our proven 1 to 3 month indicator. In addition, I invite you to consider our long-term opportunities. These rare trades look to start fast with strong Zacks Ranks, but carry through with double and triple-digit profit potential. Starting now, you can look inside our home run, value, and stocks under $10 portfolios, plus more.
Click here for a peek at this private information >>
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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