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Here's What Keeps Procter & Gamble (PG) on Growth Track
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The Procter & Gamble Company (PG - Free Report) has been in a good spot, courtesy of gains from its robust pricing actions, favorable mix 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 in the near term. Continued business investments also bode well.
Procter & Gamble continued its robust top and bottom-line surprise trend for the fifth consecutive quarter in first-quarter fiscal 2024. Sales and earnings also improved year over year. PG’s core earnings increased 17% year over year and currency-neutral earnings per share (EPS) grew 21%. The strong bottom-line results have stemmed from improved sales, operating margin expansion and lower shares outstanding.
Shares of the currently Zacks Rank #2 (Buy) company have lost 0.1% in the past six months compared with the industry’s 0.9% decline. The stock also compared favorably with the Consumer Staples sector’s decline of 4.5%.
The Zacks Consensus Estimate for PG’s current financial-year sales and earnings indicates growth of 4% and 8.8%, respectively, from the year-ago reported number.
Image Source: Zacks Investment Research
What’s Working Well for PG?
Procter & Gamble’s products play a key role in meeting consumers' daily health, hygiene and cleaning needs. The company witnessed a continued strong momentum in the fiscal first 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% year over year, backed by a 7% rise in pricing and a 1% gain from a positive product mix, offset by a 1% decline in volume. Each of the company’s business segments reported growth in organic sales. Organic sales rose 5% for Beauty, 9% each for the Grooming and Fabric & Home Care segments, 10% for Health Care, and 7% for the Baby, Feminine & Family Care segments.
Procter & Gamble has provided an optimistic view for fiscal 2024, driven by robust quarterly results. The company anticipates year-over-year all-in sales growth of 2-4% for fiscal 2024. Organic sales are likely to increase 4-5% in fiscal 2024. The company expects the reported EPS to increase 6-9% year over year to the range of $6.25-$6.43. It reported earnings of $5.90 per share in fiscal 2023. The midpoint of the EPS view of $6.34 indicates a year-over-year increase of 7.5%.
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.
With the introduction of the supply chain 3.0 program in the last fiscal year, the company is driving improved capacity, greater agility, flexibility, scalability, transparency and resilience, along with greater productivity. The company anticipates benefiting from tailwinds of $800 million after tax in fiscal 2024, attributed to favorable commodity costs.
Procter & Gamble remains focused on its commitment to rewarding shareholders through dividend payments and share repurchases. The company returned $3.8 billion of value to its shareholders in first-quarter fiscal 2024. This included $2.3 billion of dividend payouts and $1.5 billion of share buybacks. The company intends to make dividend payouts of more than $9 billion, along with share repurchases of $5-$6 billion in fiscal 2024.
Management also declared its quarterly dividend to 94.07 cents per share, payable on or after Nov 15, 2023, to shareholders of record as of Oct 20. This marked the 67th consecutive dividend increase and the 133rd consecutive year of dividend payouts. It has a dividend payout ratio of 61%, an annualized dividend yield of 2.5% and a free cash flow yield of 3.9%.
Solid demand, brand strength and productivity efforts bode well and will likely help PG stay afloat despite cost headwinds and rising inflation.
Other Stocks to Consider
Some other top-ranked stocks from the broader Consumer Staples space are e.l.f. Beauty (ELF - Free Report) , Vita Coco Company (COCO - Free Report) and Fomento Economico Mexicano (FMX - Free Report) .
The Zacks Consensus Estimate for e.l.f. Beauty’s current financial-year sales and EPS indicates growth of 57.8% and 61.5%, respectively, from the year-ago reported number. The consensus mark for ELF’s EPS has remained unchanged in the past 30 days.
Vita Coco, which develops, markets and distributes coconut water products in the United States, Canada, Europe, the Middle East and the Asia Pacific, currently sports a Zacks Rank of 1. COCO has a trailing four-quarter earnings surprise of 25.7%, on average.
The Zacks Consensus Estimate for Vita Coco’s current financial year’s sales and EPS indicates growth of 13.5% and 243.5%, respectively, from the year-ago reported figure. The consensus mark for COCO’s EPS has moved down a penny in the past 30 days.
Fomento Economico Mexicano, alias FEMSA in the beverage industry through Coca-Cola FEMSA, is the world’s largest franchise bottler for Coca-Cola products. It currently carries a Zacks Rank of 2. FMX has a trailing four-quarter earnings surprise of 23.2%, on average.
The Zacks Consensus Estimate for FMX’s current financial-year sales and earnings indicates growth of 32.3% and 60.3%, respectively, from the year-earlier reported figure. The consensus mark for FMX’s EPS has moved up 5.8% in the past 30 days.
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Here's What Keeps Procter & Gamble (PG) on Growth Track
The Procter & Gamble Company (PG - Free Report) has been in a good spot, courtesy of gains from its robust pricing actions, favorable mix 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 in the near term. Continued business investments also bode well.
Procter & Gamble continued its robust top and bottom-line surprise trend for the fifth consecutive quarter in first-quarter fiscal 2024. Sales and earnings also improved year over year. PG’s core earnings increased 17% year over year and currency-neutral earnings per share (EPS) grew 21%. The strong bottom-line results have stemmed from improved sales, operating margin expansion and lower shares outstanding.
Shares of the currently Zacks Rank #2 (Buy) company have lost 0.1% in the past six months compared with the industry’s 0.9% decline. The stock also compared favorably with the Consumer Staples sector’s decline of 4.5%.
The Zacks Consensus Estimate for PG’s current financial-year sales and earnings indicates growth of 4% and 8.8%, respectively, from the year-ago reported number.
Image Source: Zacks Investment Research
What’s Working Well for PG?
Procter & Gamble’s products play a key role in meeting consumers' daily health, hygiene and cleaning needs. The company witnessed a continued strong momentum in the fiscal first 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% year over year, backed by a 7% rise in pricing and a 1% gain from a positive product mix, offset by a 1% decline in volume. Each of the company’s business segments reported growth in organic sales. Organic sales rose 5% for Beauty, 9% each for the Grooming and Fabric & Home Care segments, 10% for Health Care, and 7% for the Baby, Feminine & Family Care segments.
Procter & Gamble has provided an optimistic view for fiscal 2024, driven by robust quarterly results. The company anticipates year-over-year all-in sales growth of 2-4% for fiscal 2024. Organic sales are likely to increase 4-5% in fiscal 2024. The company expects the reported EPS to increase 6-9% year over year to the range of $6.25-$6.43. It reported earnings of $5.90 per share in fiscal 2023. The midpoint of the EPS view of $6.34 indicates a year-over-year increase of 7.5%.
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.
With the introduction of the supply chain 3.0 program in the last fiscal year, the company is driving improved capacity, greater agility, flexibility, scalability, transparency and resilience, along with greater productivity. The company anticipates benefiting from tailwinds of $800 million after tax in fiscal 2024, attributed to favorable commodity costs.
Procter & Gamble remains focused on its commitment to rewarding shareholders through dividend payments and share repurchases. The company returned $3.8 billion of value to its shareholders in first-quarter fiscal 2024. This included $2.3 billion of dividend payouts and $1.5 billion of share buybacks. The company intends to make dividend payouts of more than $9 billion, along with share repurchases of $5-$6 billion in fiscal 2024.
Management also declared its quarterly dividend to 94.07 cents per share, payable on or after Nov 15, 2023, to shareholders of record as of Oct 20. This marked the 67th consecutive dividend increase and the 133rd consecutive year of dividend payouts. It has a dividend payout ratio of 61%, an annualized dividend yield of 2.5% and a free cash flow yield of 3.9%.
Solid demand, brand strength and productivity efforts bode well and will likely help PG stay afloat despite cost headwinds and rising inflation.
Other Stocks to Consider
Some other top-ranked stocks from the broader Consumer Staples space are e.l.f. Beauty (ELF - Free Report) , Vita Coco Company (COCO - Free Report) and Fomento Economico Mexicano (FMX - Free Report) .
e.l.f. Beauty currently sports a Zacks Rank #1 (Strong Buy). ELF has a trailing four-quarter earnings surprise of 90.1%, on average. You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for e.l.f. Beauty’s current financial-year sales and EPS indicates growth of 57.8% and 61.5%, respectively, from the year-ago reported number. The consensus mark for ELF’s EPS has remained unchanged in the past 30 days.
Vita Coco, which develops, markets and distributes coconut water products in the United States, Canada, Europe, the Middle East and the Asia Pacific, currently sports a Zacks Rank of 1. COCO has a trailing four-quarter earnings surprise of 25.7%, on average.
The Zacks Consensus Estimate for Vita Coco’s current financial year’s sales and EPS indicates growth of 13.5% and 243.5%, respectively, from the year-ago reported figure. The consensus mark for COCO’s EPS has moved down a penny in the past 30 days.
Fomento Economico Mexicano, alias FEMSA in the beverage industry through Coca-Cola FEMSA, is the world’s largest franchise bottler for Coca-Cola products. It currently carries a Zacks Rank of 2. FMX has a trailing four-quarter earnings surprise of 23.2%, on average.
The Zacks Consensus Estimate for FMX’s current financial-year sales and earnings indicates growth of 32.3% and 60.3%, respectively, from the year-earlier reported figure. The consensus mark for FMX’s EPS has moved up 5.8% in the past 30 days.