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Here's Why Procter & Gamble (PG) is an Attractive Pick Now
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The Procter & Gamble Company (PG - Free Report) looks like a promising bet on the back of its robust pricing actions, segmental strength and improved productivity, which have been aiding its performance for a while. The company’s focus on productivity and cost-saving plans positions it to drive margins going forward. Continued business investments also bode well.
Procter & Gamble continued its robust top and bottom-line surprise trend for the third consecutive quarter in third-quarter fiscal 2023. Sales and earnings also improved year over year. The company’s organic sales grew, driven by robust pricing and a favorable mix, along with strength across segments.
Shares of this Zacks Rank #2 (Buy) company have rallied 13% in the past year compared with the industry’s growth of 13.8%.
The Zacks Consensus Estimate for PG’s current financial-year sales and earnings suggests growth of 1.5% and 0.9%, respectively, from the year-ago reported numbers.
Image Source: Zacks Investment Research
What’s Working Well for PG?
Procter & Gamble’s products play a key role in meeting the daily health, hygiene and cleaning needs of consumers around the world. The company witnessed a continued strong momentum in the fiscal third quarter, as reflected by the underlying strength in brands and appropriate strategies, which aided organic sales growth.
On an organic basis (excluding the impacts of acquisitions, divestitures and foreign exchange), revenues improved 7% in the fiscal third quarter, backed by a 10% rise in pricing and a 1% gain from a positive product mix, offset by a 3% decline in volume.
On an organic basis (excluding the impacts of acquisitions, divestitures and foreign exchange), revenues improved 7%, backed by a 9% rise in pricing and a 1% gain from a positive product mix, offset by a 3% decline in volume. All the company’s business segments reported growth in organic sales. Organic sales rose 4% for Beauty, 5% for Grooming, 8% each for Fabric & Home Care and Health Care segments, and 6% for the Baby, Feminine & Family Care segment.
Driven by the robust quarterly results, management raised its fiscal 2023 sales view. For fiscal 2023, the company anticipates year-over-year all-in sales growth of 1% compared with down 1% to flat stated earlier. Organic sales are likely to increase 6% in fiscal 2023 versus 4-5% growth mentioned earlier.
Procter & Gamble has been focused on productivity and cost-saving plans to boost margins. PG’s continued investment in its businesses — alongside efforts to offset macro cost headwinds, and balance top and bottom-line growth — underscores its productivity efforts. The company is witnessing cost savings and efficiency improvements across all facets of the business.
In the third quarter of fiscal 2023, the company’s gross margin was aided by 210 bps of gross productivity savings, while the operating margin included productivity savings of 290 bps. SG&A expenses in the quarter reflected productivity savings of 80 bps.
Meanwhile, Procter & Gamble retained its earnings outlook for fiscal 2023, which continues to reflect supply-chain issues, higher transportation costs, geopolitical challenges, currency headwinds and rising inflation, which have been impacting consumer confidence.
The company expects EPS on a reported basis to be flat to up 4% from the $5.81 recorded in fiscal 2022. It anticipates EPS at the low end of the range due to the impacts of ongoing commodity and material cost headwinds, and currency impacts.
Conclusion
Solid demand, brand strength and productivity efforts bode well and will likely help PG stay afloat despite cost headwinds and rising inflation. Also, a long-term earnings growth rate of 6.1% raises optimism about the stock.
Clorox currently flaunts a Zacks Rank #1 (Strong Buy). CLX has a trailing four-quarter earnings surprise of 25.5%, on average. The company has an expected long-term earnings growth rate of 12.5%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Clorox’s current financial-year sales and earnings suggests growth of 2% and 9.3%, respectively, from the year-ago reported numbers. The consensus mark for CLX’s earnings per share has moved up by a penny in the past seven days.
Coty currently sports a Zacks Rank of 1 and has an expected long-term earnings growth rate of 15.6%. COTY has a trailing four-quarter earnings surprise of 145%, on average.
The Zacks Consensus Estimate for COTY’s current financial-year sales and earnings suggests growth of 3.1% and 89.3%, respectively, from the prior-year reported numbers. The consensus mark for COTY’s earnings per share has moved up by a penny in the past 30 days.
PepsiCo currently has a Zacks Rank #2 (Buy) and an expected long-term earnings growth rate of 7.8%. PEP has a trailing four-quarter earnings surprise of 6.3%, on average.
The Zacks Consensus Estimate for PepsiCo’s current financial-year sales and earnings per share suggests growth of 4.9% and 7.5%, respectively, from the year-ago reported numbers. The consensus mark for PEP’s earnings per share has been unchanged in the past 30 days.
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Here's Why Procter & Gamble (PG) is an Attractive Pick Now
The Procter & Gamble Company (PG - Free Report) looks like a promising bet on the back of its robust pricing actions, segmental strength and improved productivity, which have been aiding its performance for a while. The company’s focus on productivity and cost-saving plans positions it to drive margins going forward. Continued business investments also bode well.
Procter & Gamble continued its robust top and bottom-line surprise trend for the third consecutive quarter in third-quarter fiscal 2023. Sales and earnings also improved year over year. The company’s organic sales grew, driven by robust pricing and a favorable mix, along with strength across segments.
Shares of this Zacks Rank #2 (Buy) company have rallied 13% in the past year compared with the industry’s growth of 13.8%.
The Zacks Consensus Estimate for PG’s current financial-year sales and earnings suggests growth of 1.5% and 0.9%, respectively, from the year-ago reported numbers.
Image Source: Zacks Investment Research
What’s Working Well for PG?
Procter & Gamble’s products play a key role in meeting the daily health, hygiene and cleaning needs of consumers around the world. The company witnessed a continued strong momentum in the fiscal third quarter, as reflected by the underlying strength in brands and appropriate strategies, which aided organic sales growth.
On an organic basis (excluding the impacts of acquisitions, divestitures and foreign exchange), revenues improved 7% in the fiscal third quarter, backed by a 10% rise in pricing and a 1% gain from a positive product mix, offset by a 3% decline in volume.
On an organic basis (excluding the impacts of acquisitions, divestitures and foreign exchange), revenues improved 7%, backed by a 9% rise in pricing and a 1% gain from a positive product mix, offset by a 3% decline in volume. All the company’s business segments reported growth in organic sales. Organic sales rose 4% for Beauty, 5% for Grooming, 8% each for Fabric & Home Care and Health Care segments, and 6% for the Baby, Feminine & Family Care segment.
Driven by the robust quarterly results, management raised its fiscal 2023 sales view. For fiscal 2023, the company anticipates year-over-year all-in sales growth of 1% compared with down 1% to flat stated earlier. Organic sales are likely to increase 6% in fiscal 2023 versus 4-5% growth mentioned earlier.
Procter & Gamble has been focused on productivity and cost-saving plans to boost margins. PG’s continued investment in its businesses — alongside efforts to offset macro cost headwinds, and balance top and bottom-line growth — underscores its productivity efforts. The company is witnessing cost savings and efficiency improvements across all facets of the business.
In the third quarter of fiscal 2023, the company’s gross margin was aided by 210 bps of gross productivity savings, while the operating margin included productivity savings of 290 bps. SG&A expenses in the quarter reflected productivity savings of 80 bps.
Meanwhile, Procter & Gamble retained its earnings outlook for fiscal 2023, which continues to reflect supply-chain issues, higher transportation costs, geopolitical challenges, currency headwinds and rising inflation, which have been impacting consumer confidence.
The company expects EPS on a reported basis to be flat to up 4% from the $5.81 recorded in fiscal 2022. It anticipates EPS at the low end of the range due to the impacts of ongoing commodity and material cost headwinds, and currency impacts.
Conclusion
Solid demand, brand strength and productivity efforts bode well and will likely help PG stay afloat despite cost headwinds and rising inflation. Also, a long-term earnings growth rate of 6.1% raises optimism about the stock.
Other Stocks to Consider
Some other top-ranked stocks from the broader Consumer Staples space are Clorox (CLX - Free Report) , Coty Inc. (COTY - Free Report) and PepsiCo (PEP - Free Report) .
Clorox currently flaunts a Zacks Rank #1 (Strong Buy). CLX has a trailing four-quarter earnings surprise of 25.5%, on average. The company has an expected long-term earnings growth rate of 12.5%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Clorox’s current financial-year sales and earnings suggests growth of 2% and 9.3%, respectively, from the year-ago reported numbers. The consensus mark for CLX’s earnings per share has moved up by a penny in the past seven days.
Coty currently sports a Zacks Rank of 1 and has an expected long-term earnings growth rate of 15.6%. COTY has a trailing four-quarter earnings surprise of 145%, on average.
The Zacks Consensus Estimate for COTY’s current financial-year sales and earnings suggests growth of 3.1% and 89.3%, respectively, from the prior-year reported numbers. The consensus mark for COTY’s earnings per share has moved up by a penny in the past 30 days.
PepsiCo currently has a Zacks Rank #2 (Buy) and an expected long-term earnings growth rate of 7.8%. PEP has a trailing four-quarter earnings surprise of 6.3%, on average.
The Zacks Consensus Estimate for PepsiCo’s current financial-year sales and earnings per share suggests growth of 4.9% and 7.5%, respectively, from the year-ago reported numbers. The consensus mark for PEP’s earnings per share has been unchanged in the past 30 days.