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Will Strategies Help Procter & Gamble (PG) Beat on Q3 Earnings?
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The Procter & Gamble Company (PG - Free Report) is set to report third-quarter fiscal 2024 results on Apr 18, before the opening bell. The company is expected to have witnessed sales and earnings growth in the to-be-reported quarter.
The Zacks Consensus Estimate for the company’s fiscal third-quarter earnings is pegged at $1.42 per share, indicating a 3.7% increase from the year-ago quarter’s reported figure. The consensus mark has been unchanged in the past 30 days. For fiscal third-quarter revenues, the consensus mark is pegged at $20.5 billion, suggesting a 2.1% rise from the prior-year quarter’s reported figure.
In the last reported quarter, the company recorded an earnings surprise of 8.2%. It has delivered a bottom-line beat of 5.7%, on average, in the trailing four quarters.
Key Factors to Note
Procter & Gamble has been gaining from robust pricing and a favorable mix, along with strength across segments. 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.
The company has been demonstrating its dominance in the global market by strategically leveraging its brand strength to drive organic sales growth. As a manufacturer of products catering to the daily needs of consumers worldwide, P&G's success in the preceding quarters can be attributed to its robust brand portfolio and effective business strategies. The persistence of these trends is expected to get reflected in the company’s organic sales for the fiscal third quarter.
We expect organic sales to increase 4.4% in the to-be-reported quarter. Organic sales are expected to rise 3% for Beauty, 8% for Grooming, 6% for Health Care, and 4% each for the Fabric & Home Care, and Baby, Feminine & Family Care segments.
P&G has been diligently pursuing cost-saving and productivity measures to drive margins and reinforce its competitive advantage. The company's commitment to enhancing productivity, while mitigating macro cost headwinds has been integral to maintaining a balanced top and bottom-line growth. Its focus on productivity and cost-saving plans are likely to have boosted margins in the to-be-reported quarter.
We expect P&G's core gross margin for the fiscal third quarter to have been influenced by significant productivity savings. Our model predicts a core gross margin expansion of 80 bps for the to-be-reported quarter.
However, currency headwinds are likely to have hurt the company’s performance in the to-be-reported quarter. Rising input costs are expected to have partly weighed on the fiscal third-quarter performance. Additionally, Procter & Gamble has been witnessing elevated SG&A expenses due to higher supply-chain costs, rising inflation and elevated transportation expenses.
On the last reported quarter’s earnings call, management expected ongoing supply-chain issues, higher transportation costs, geopolitical challenges, currency headwinds and rising inflation to continue to impact consumer confidence throughout fiscal 2024. The persistence of these headwinds is likely to get reflected in the company’s bottom-line results to some extent.
Our estimate indicates a 2% impact from currency headwinds in the third quarter of fiscal 2024. Meanwhile, our estimate for core SG&A expenses of $5.8 billion indicates a year-over-year rise of 6.2%. As a percentage of sales, core SG&A expenses are estimated to reflect a 90-bps increase from the year-ago quarter’s reported figure. Consequently, our model suggests a 10-bps operating margin decline to 21.1% for the fiscal third quarter.
Zacks Model
Our proven model does not conclusively predict an earnings beat for Procter & Gamble this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that is not the case here. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Procter & Gamble has a Zacks Rank #4 (Sell) and an Earnings ESP of +0.28%.
Stocks With Favorable Combination
Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to deliver an earnings beat this time around.
Colgate-Palmolive (CL - Free Report) currently has an Earnings ESP of +0.42% and a Zacks Rank #2. CL is anticipated to register top and bottom-line growth when it reports first-quarter 2024 results. The Zacks Consensus Estimate for Colgate’s quarterly revenues is pegged at $4.95 billion, indicating an increase of 3.7% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for Colgate’s bottom line has been unchanged in the past 30 days at 82 cents per share. The consensus estimate for earnings suggests a rise of 12.3% from the prior-year quarter’s reported figure. CL has delivered an earnings beat of 4.2%, on average, in the trailing four quarters.
Coty (COTY - Free Report) currently has an Earnings ESP of +12.93% and a Zacks Rank #3. The company is expected to register top-line growth when it reports third-quarter fiscal 2024 numbers. The Zacks Consensus Estimate for COTY’s quarterly revenues is pegged at $1.37 billion, which suggests an increase of 6.4% from the prior-year quarter’s reported figure.
The Zacks Consensus Estimate for COTY’s quarterly earnings has been unchanged at 6 cents in the past 30 days, suggesting a 68.4% decline from the year-ago quarter’s reported number. COTY has delivered an earnings beat of 115.3%, on average, in the trailing four quarters.
PepsiCo (PEP - Free Report) has an Earnings ESP of +0.50% and a Zacks Rank #3 at present. The company is expected to register top and bottom-line growth when it reports first-quarter 2024 numbers. The Zacks Consensus Estimate for its quarterly revenues is pegged at $18.2 billion, which suggests growth of 1.7% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for PepsiCo’s quarterly earnings has been unchanged in the past 30 days at $1.52 per share. The consensus estimate for earnings suggests an improvement of 1.3% from the year-ago quarter’s reported figure. PEP has delivered an earnings surprise of 5.96%, on average, in the trailing four quarters.
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Will Strategies Help Procter & Gamble (PG) Beat on Q3 Earnings?
The Procter & Gamble Company (PG - Free Report) is set to report third-quarter fiscal 2024 results on Apr 18, before the opening bell. The company is expected to have witnessed sales and earnings growth in the to-be-reported quarter.
The Zacks Consensus Estimate for the company’s fiscal third-quarter earnings is pegged at $1.42 per share, indicating a 3.7% increase from the year-ago quarter’s reported figure. The consensus mark has been unchanged in the past 30 days. For fiscal third-quarter revenues, the consensus mark is pegged at $20.5 billion, suggesting a 2.1% rise from the prior-year quarter’s reported figure.
In the last reported quarter, the company recorded an earnings surprise of 8.2%. It has delivered a bottom-line beat of 5.7%, on average, in the trailing four quarters.
Key Factors to Note
Procter & Gamble has been gaining from robust pricing and a favorable mix, along with strength across segments. 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.
The company has been demonstrating its dominance in the global market by strategically leveraging its brand strength to drive organic sales growth. As a manufacturer of products catering to the daily needs of consumers worldwide, P&G's success in the preceding quarters can be attributed to its robust brand portfolio and effective business strategies. The persistence of these trends is expected to get reflected in the company’s organic sales for the fiscal third quarter.
We expect organic sales to increase 4.4% in the to-be-reported quarter. Organic sales are expected to rise 3% for Beauty, 8% for Grooming, 6% for Health Care, and 4% each for the Fabric & Home Care, and Baby, Feminine & Family Care segments.
P&G has been diligently pursuing cost-saving and productivity measures to drive margins and reinforce its competitive advantage. The company's commitment to enhancing productivity, while mitigating macro cost headwinds has been integral to maintaining a balanced top and bottom-line growth. Its focus on productivity and cost-saving plans are likely to have boosted margins in the to-be-reported quarter.
We expect P&G's core gross margin for the fiscal third quarter to have been influenced by significant productivity savings. Our model predicts a core gross margin expansion of 80 bps for the to-be-reported quarter.
However, currency headwinds are likely to have hurt the company’s performance in the to-be-reported quarter. Rising input costs are expected to have partly weighed on the fiscal third-quarter performance. Additionally, Procter & Gamble has been witnessing elevated SG&A expenses due to higher supply-chain costs, rising inflation and elevated transportation expenses.
On the last reported quarter’s earnings call, management expected ongoing supply-chain issues, higher transportation costs, geopolitical challenges, currency headwinds and rising inflation to continue to impact consumer confidence throughout fiscal 2024. The persistence of these headwinds is likely to get reflected in the company’s bottom-line results to some extent.
Our estimate indicates a 2% impact from currency headwinds in the third quarter of fiscal 2024. Meanwhile, our estimate for core SG&A expenses of $5.8 billion indicates a year-over-year rise of 6.2%. As a percentage of sales, core SG&A expenses are estimated to reflect a 90-bps increase from the year-ago quarter’s reported figure. Consequently, our model suggests a 10-bps operating margin decline to 21.1% for the fiscal third quarter.
Zacks Model
Our proven model does not conclusively predict an earnings beat for Procter & Gamble this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that is not the case here. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Procter & Gamble has a Zacks Rank #4 (Sell) and an Earnings ESP of +0.28%.
Stocks With Favorable Combination
Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to deliver an earnings beat this time around.
Colgate-Palmolive (CL - Free Report) currently has an Earnings ESP of +0.42% and a Zacks Rank #2. CL is anticipated to register top and bottom-line growth when it reports first-quarter 2024 results. The Zacks Consensus Estimate for Colgate’s quarterly revenues is pegged at $4.95 billion, indicating an increase of 3.7% from the figure reported in the prior-year quarter.
You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Colgate’s bottom line has been unchanged in the past 30 days at 82 cents per share. The consensus estimate for earnings suggests a rise of 12.3% from the prior-year quarter’s reported figure. CL has delivered an earnings beat of 4.2%, on average, in the trailing four quarters.
Coty (COTY - Free Report) currently has an Earnings ESP of +12.93% and a Zacks Rank #3. The company is expected to register top-line growth when it reports third-quarter fiscal 2024 numbers. The Zacks Consensus Estimate for COTY’s quarterly revenues is pegged at $1.37 billion, which suggests an increase of 6.4% from the prior-year quarter’s reported figure.
The Zacks Consensus Estimate for COTY’s quarterly earnings has been unchanged at 6 cents in the past 30 days, suggesting a 68.4% decline from the year-ago quarter’s reported number. COTY has delivered an earnings beat of 115.3%, on average, in the trailing four quarters.
PepsiCo (PEP - Free Report) has an Earnings ESP of +0.50% and a Zacks Rank #3 at present. The company is expected to register top and bottom-line growth when it reports first-quarter 2024 numbers. The Zacks Consensus Estimate for its quarterly revenues is pegged at $18.2 billion, which suggests growth of 1.7% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for PepsiCo’s quarterly earnings has been unchanged in the past 30 days at $1.52 per share. The consensus estimate for earnings suggests an improvement of 1.3% from the year-ago quarter’s reported figure. PEP has delivered an earnings surprise of 5.96%, on average, in the trailing four quarters.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.