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The Procter & Gamble Company (PG - Free Report) , popularly known as P&G, reported third-quarter fiscal 2017 financial results, wherein earnings exceeded expectations, while revenues missed the same.
The company’s results were affected by market slowdown, continued geopolitical disruptions and foreign exchange challenges.
P&G’s fiscal third-quarter adjusted earnings of 96 cents per share beat the Zacks Consensus Estimate of 94 cents by 2.1%. The bottom line also increased 12% from the prior-year quarter. Currency-neutral core earnings per share (EPS) improved 15%.
Sales in Details
P&G’s reported net sales of $15.61 billion missed the Zacks Consensus Estimate of $15.71 billion by 0.7%. The top line also declined 1% year over year. Foreign exchange had a negative impact of 2% on sales.
Organically (excluding the impact of acquisitions, divestitures and foreign exchange), revenues grew 1% on the back of a 1% increase in organic volumes.
Of the five business segments, four recorded positive organic sales growth. The Health Care segment reported the highest growth of 6% in the quarter in the group. The Beauty segment, Fabric & Home Care, as well as Baby, Feminine & Family Care segments reported 1% growth, respectively. The Grooming segment, on the other hand, posted 6% organic sales decline.
Rising Margins
Core gross margin decreased 40 basis points (bps) to 50.5% as productivity cost were more than offset by headwinds like unfavorable geographic and product mix.
Core selling, general and administrative expense (SG&A) margin decreased 30 bps (as a percentage of sales) to 28.4% as productivity savings were more than offset by higher investments. Core operating margin also decreased 10 bps year over year.
P&G has been cutting costs aggressively to reduce spending across all areas like supply chain, research & development, marketing and overheads.
Financials
As of Mar 31, 2017, the company’s cash and cash equivalents were $5,817 million, down from $7,102 million at the end of fiscal 2016 (as of Jun 30, 2016). Long-term debt was $16,633 million as of Mar 31, 2011, down from $18,945 million at the end of fiscal 2016.
Cash flow from operating activities was $9,065 million during the first nine months of fiscal 2017, down from $11,296 million a year ago.
Fiscal 2017 Guidance
The Cincinnati, OH-based company maintained its organic sales growth projection in the range of 2–3% for fiscal 2017. However, the company expects the combined foreign exchange headwind and minor brand divestitures to lower sales by 2–3%. Hence, P&G expects all-in sales growth to remain down 1% to flat (earlier flat) for fiscal 2017.
The core earnings per share growth projection is maintained in the mid-single digit range compared with fiscal 2016 core earnings of $3.67 per share.
The company has increased its guidance for adjusted free cash flow productivity from 90% to approximately 95% for the fiscal year.
Colgate-Palmolive Co. (CL - Free Report) is slated to release its quarterly numbers on Apr 28. The Zacks Consensus Estimate for earnings is pegged at 66 cents.
The Clorox Company (CLX - Free Report) is scheduled to release its quarterly numbers on May 3. The Zacks Consensus Estimate for the bottom line stands at $1.30.
Church & Dwight Co. Inc. (CHD - Free Report) is slated to release its quarterly numbers on May 4. The Zacks Consensus Estimate for earnings is pegged at 46 cents.
Procter & Gamble Company (The) Price, Consensus and EPS Surprise
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Procter & Gamble (PG) Tops Q3 Earnings Estimates, Sales Dip
The Procter & Gamble Company (PG - Free Report) , popularly known as P&G, reported third-quarter fiscal 2017 financial results, wherein earnings exceeded expectations, while revenues missed the same.
The company’s results were affected by market slowdown, continued geopolitical disruptions and foreign exchange challenges.
P&G’s fiscal third-quarter adjusted earnings of 96 cents per share beat the Zacks Consensus Estimate of 94 cents by 2.1%. The bottom line also increased 12% from the prior-year quarter. Currency-neutral core earnings per share (EPS) improved 15%.
Sales in Details
P&G’s reported net sales of $15.61 billion missed the Zacks Consensus Estimate of $15.71 billion by 0.7%. The top line also declined 1% year over year. Foreign exchange had a negative impact of 2% on sales.
Organically (excluding the impact of acquisitions, divestitures and foreign exchange), revenues grew 1% on the back of a 1% increase in organic volumes.
Of the five business segments, four recorded positive organic sales growth. The Health Care segment reported the highest growth of 6% in the quarter in the group. The Beauty segment, Fabric & Home Care, as well as Baby, Feminine & Family Care segments reported 1% growth, respectively. The Grooming segment, on the other hand, posted 6% organic sales decline.
Rising Margins
Core gross margin decreased 40 basis points (bps) to 50.5% as productivity cost were more than offset by headwinds like unfavorable geographic and product mix.
Core selling, general and administrative expense (SG&A) margin decreased 30 bps (as a percentage of sales) to 28.4% as productivity savings were more than offset by higher investments. Core operating margin also decreased 10 bps year over year.
P&G has been cutting costs aggressively to reduce spending across all areas like supply chain, research & development, marketing and overheads.
Financials
As of Mar 31, 2017, the company’s cash and cash equivalents were $5,817 million, down from $7,102 million at the end of fiscal 2016 (as of Jun 30, 2016). Long-term debt was $16,633 million as of Mar 31, 2011, down from $18,945 million at the end of fiscal 2016.
Cash flow from operating activities was $9,065 million during the first nine months of fiscal 2017, down from $11,296 million a year ago.
Fiscal 2017 Guidance
The Cincinnati, OH-based company maintained its organic sales growth projection in the range of 2–3% for fiscal 2017. However, the company expects the combined foreign exchange headwind and minor brand divestitures to lower sales by 2–3%. Hence, P&G expects all-in sales growth to remain down 1% to flat (earlier flat) for fiscal 2017.
The core earnings per share growth projection is maintained in the mid-single digit range compared with fiscal 2016 core earnings of $3.67 per share.
The company has increased its guidance for adjusted free cash flow productivity from 90% to approximately 95% for the fiscal year.
P&G carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Upcoming Peer Releases
Colgate-Palmolive Co. (CL - Free Report) is slated to release its quarterly numbers on Apr 28. The Zacks Consensus Estimate for earnings is pegged at 66 cents.
The Clorox Company (CLX - Free Report) is scheduled to release its quarterly numbers on May 3. The Zacks Consensus Estimate for the bottom line stands at $1.30.
Church & Dwight Co. Inc. (CHD - Free Report) is slated to release its quarterly numbers on May 4. The Zacks Consensus Estimate for earnings is pegged at 46 cents.
Procter & Gamble Company (The) Price, Consensus and EPS Surprise
Procter & Gamble Company (The) Price, Consensus and EPS Surprise | Procter & Gamble Company (The) Quote
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