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.
Procter and Gamble Earnings: Can Strong Retail Sales Trigger a Beat?
Read MoreHide Full Article
Procter and Gamble(PG - Free Report) , the multinational consumer goods brand, reports earnings Wednesday, October 18 before the market opens and expectations are currently mixed.
Just this morning we found out that US retail sales jumped 0.7% in September, beating estimates of 0.3% and demonstrating just how sound household spending is. Can this positive wave carry Procter and Gamble’s earnings as well?
On the other hand, Consumer Staples Stocks have been hammered this last month after higher interest rates have caused “Defensive Investors” to rotate into Treasuries. The sector has been pushed back to levels last seen in early 2021.
But I think this creates an opportunity in Procter and Gamble stock. After getting bombed out over the last few weeks PG’s valuation has moved back below its historical median. And coupled with the surprisingly strong retail sales data, we may see earnings boosted above expectations. This could very well serve as a bullish catalyst for the stock in the coming days.
Image Source: TradingView
Company Profile
Procter and Gamble is a branded consumer products company which markets its goods in more than 180 countries primarily through mass merchandisers, grocery stores, membership club stores, drug stores, department stores, distributors, baby stores, specialty beauty stores, e-commerce, high frequency stores and pharmacies.
It is a stable company with a long history of steady returns and raising dividends. The company has paid dividends for 133 years and raised the payment for the last 67 consecutive years making it a “Dividend King.” Today, Procter and Gamble pays a dividend yield of 2.6%. This continuous stream of income is exactly why defensive investors have flocked to the stock.
Image Source: Zacks Investment Research
Earnings Estimates
Earnings estimates for Procter and Gamble have stayed mostly unchanged throughout 2024, giving it a Zacks Rank #3 (Hold) rating.
Image Source: Zacks Investment Research
Nonetheless, earnings and sales are expected to rise YoY, following the ever-steady pace of gains at Procter and Gamble. Current quarter sales are expected to grow 5.1% YoY to $21.7 billion and earnings are expected to grow 8.9% YoY to $1.71 per share.
Image Source: Zacks Investment Research
Valuation
After the recent tumble in stock prices, PG now trades at a discount to it five-year median earning multiple. Today it is trading at a one year forward earnings multiple of 22.9x, which is below its median of 24.6x.
Image Source: Zacks Investment Research
Competitors
Another Consumer Staples stock that has languished in sympathy with the broader sector is Clorox(CLX - Free Report) , which is down -9% YTD. Equally recognizable as a brand, although just a fraction of the size, the setup isn’t quite as favorable for Clorox as it is for Procter and Gamble.
For one, its stock has underperformed both the industry and PG stock, showing relative weakness. Second, it has a richer valuation, while also expecting falling sales and earnings this and next year. And lastly, Clorox has a Zacks Rank #5 (Strong Sell) rating, demonstrating analysts’ bearishness on the stock.
Favoring Procter and Gamble over Clorox over the near-term looks reasonable for defensive, and consumer staples investors.
Image Source: Zacks Investment Research
Bottom Line
I think, considering the setup going into earnings, Procter and Gamble actually has a good chance of registering a beat. The odds of the stock rallying are further boosted by the extremely bearish sentiment in the sector, which can incite a relief rally as well as robust consumer sentiment.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Procter and Gamble Earnings: Can Strong Retail Sales Trigger a Beat?
Procter and Gamble (PG - Free Report) , the multinational consumer goods brand, reports earnings Wednesday, October 18 before the market opens and expectations are currently mixed.
Just this morning we found out that US retail sales jumped 0.7% in September, beating estimates of 0.3% and demonstrating just how sound household spending is. Can this positive wave carry Procter and Gamble’s earnings as well?
On the other hand, Consumer Staples Stocks have been hammered this last month after higher interest rates have caused “Defensive Investors” to rotate into Treasuries. The sector has been pushed back to levels last seen in early 2021.
But I think this creates an opportunity in Procter and Gamble stock. After getting bombed out over the last few weeks PG’s valuation has moved back below its historical median. And coupled with the surprisingly strong retail sales data, we may see earnings boosted above expectations. This could very well serve as a bullish catalyst for the stock in the coming days.
Image Source: TradingView
Company Profile
Procter and Gamble is a branded consumer products company which markets its goods in more than 180 countries primarily through mass merchandisers, grocery stores, membership club stores, drug stores, department stores, distributors, baby stores, specialty beauty stores, e-commerce, high frequency stores and pharmacies.
It is a stable company with a long history of steady returns and raising dividends. The company has paid dividends for 133 years and raised the payment for the last 67 consecutive years making it a “Dividend King.” Today, Procter and Gamble pays a dividend yield of 2.6%. This continuous stream of income is exactly why defensive investors have flocked to the stock.
Image Source: Zacks Investment Research
Earnings Estimates
Earnings estimates for Procter and Gamble have stayed mostly unchanged throughout 2024, giving it a Zacks Rank #3 (Hold) rating.
Image Source: Zacks Investment Research
Nonetheless, earnings and sales are expected to rise YoY, following the ever-steady pace of gains at Procter and Gamble. Current quarter sales are expected to grow 5.1% YoY to $21.7 billion and earnings are expected to grow 8.9% YoY to $1.71 per share.
Image Source: Zacks Investment Research
Valuation
After the recent tumble in stock prices, PG now trades at a discount to it five-year median earning multiple. Today it is trading at a one year forward earnings multiple of 22.9x, which is below its median of 24.6x.
Image Source: Zacks Investment Research
Competitors
Another Consumer Staples stock that has languished in sympathy with the broader sector is Clorox (CLX - Free Report) , which is down -9% YTD. Equally recognizable as a brand, although just a fraction of the size, the setup isn’t quite as favorable for Clorox as it is for Procter and Gamble.
For one, its stock has underperformed both the industry and PG stock, showing relative weakness. Second, it has a richer valuation, while also expecting falling sales and earnings this and next year. And lastly, Clorox has a Zacks Rank #5 (Strong Sell) rating, demonstrating analysts’ bearishness on the stock.
Favoring Procter and Gamble over Clorox over the near-term looks reasonable for defensive, and consumer staples investors.
Image Source: Zacks Investment Research
Bottom Line
I think, considering the setup going into earnings, Procter and Gamble actually has a good chance of registering a beat. The odds of the stock rallying are further boosted by the extremely bearish sentiment in the sector, which can incite a relief rally as well as robust consumer sentiment.