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Bull of the Day: Procter & Gamble (PG)

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Procter & Gamble (PG - Free Report) is a consumer staples giant, and sells its products in grocery stores, pharmacies and drug stores, department stores, through mass merchandisers, and on e-commerce platforms. Its brand portfolio is full of well-known consumer names like Bounty, Febreze, Tide, Crest, Gillette, Olay, and Pampers, among many others.

Q1 Results Shine Bright

P&G’s latest quarterly report showed investors, and Wall Street, that it is still able to produce impressive growth numbers.

Earnings of $1.37 per share easily beat the Zacks Consensus Estimate, and revenues grew 7% year-over-year to $17.8 billion. Across its business segments, P&G saw organic sales gains in beauty, healthcare, and fabric & home care of 10%, 9%, and 8%, respectively.

The icing on the cake was its cash flow generation. P&G generated over $4 billion in operating cash flow in Q1, and $2 billion of that was paid out to shareholders via dividends.

As a result, the company boosted its fiscal 2020 outlook, and now expects organic sales growth of 3% to 5%, up from previous guidance of 3% to 4%. EPS growth is now estimated to be between 5% and 10%, up from 4% to 9%.

PG is on the Up and Up

Shares of P&G are up almost 28% since January compared to the S&P 500’s return of about 11.6%. Earnings estimates have been rising too, and PG is a Zacks Rank #1 (Strong Buy) pick right now.

For the current fiscal year, nine analysts have revised their bottom line estimate upwards in the last 60 days, and the Zacks Consensus Estimate has moved up nine cents from $4.84 to $4.93; earnings could see about 9% growth compared to the prior year period. 2021 looks pretty strong too, with earnings and revenue expected to continue positive year-over-year growth.

PG currently trades around 25.3X its forward full-year earnings estimates, sitting above the broader Consumer Staples Market (19X).

Going forward, P&G’s overall organic sales, earnings, and cash flow growth will help the industry titan continue to remain on top, rewarding investors with potentially more share repurchases and increasing dividend income. The company currently boasts a 2.4% yield, making P&G a stock to seriously consider adding to a portfolio.

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