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Will Sales Weakness Hit Procter & Gamble (PG) Q1 Earnings?
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The Procter & Gamble Company (PG - Free Report) ) is set to report first-quarter fiscal 2018 results on Oct 20, before the market opens. This consumer goods company has exceeded analysts’ expectations for nine consecutive quarters despite lower sales.
The company has been struggling to boost sales for the last few years. Weak volumes and slowing market growth along with foreign exchange headwind have been hurting its sales. Soft consumer-spending environment in developed markets, particularly in the United States and the United Kingdom, also adds to the worries.
The trend is unlikely to change for the to-be-reported quarter. Softness in the United States, United Kingdom and volatility in developing markets is likely to adversely impact Procter & Gamble’s results. In fact, categories in the company’s largest and most profitable market, the United States (accounting for 42% of total net sales in fiscal 2017), grew barely above flat in fiscal fourth-quarter 2017. The U.S. market growth slowed to just above 1% in fiscal 2017 from over 2% in fiscal 2016. Overall, the company expects fiscal 2018 organic sales growth of 2-3%.
Importantly, Procter & Gamble expects first quarter to witness the lowest organic sales and core earnings per share (EPS) growth of the year, as the period compares against the highest organic growth base period. Top-line headwinds from portfolio choices and the recent Gillette price reduction in the United States will primarily impact the first half of fiscal-2018 results.
Segment Discussion: Fabric & Home Care, comprising about 32% of the total revenues, is expected to get a boost in the first quarter. The Zacks Consensus Estimate for Fabric & Home Care revenues of $5.4 billion reflect growth of 3.5% sequentially and 1.3% from the year-ago quarter. The consensus estimate for Baby, Feminine & Family Care revenues of $4.6 billion indicates an increase of 0.5% from the prior-year quarter.
Again, revenues from Beauty segment are expected to increase 2.1% on a year-over-year basis. Health Care revenues will most likely witness 0.9% growth. However, Grooming revenues is likely to register 2.1% year-over-year revenue decline.
Here are the other factors that might influence Procter & Gamble’s Q1 results:
To counter the tepid sales growth, Procter & Gamble has been benefiting from its ongoing restructuring program aimed at reducing costs and driving efficiency. The company has been taking various restructuring initiatives aimed at generating higher profit and lowering costs. These initiatives have helped the company to accelerate margins growth amid the slowdown in sales.
The company’s focus on reducing its SG&A (selling, general, and administrative) costs and lowering its marketing and advertising spending could boost its operating margins in the coming quarters.
However, lower pricing owing to increased competition in the shave care category, higher commodity costs, a tough retail environment, an unfavorable mix, and year-over-year comparables are anticipated to continue being a drag in its bottom-line growth rate.
For the fiscal first quarter, the Zacks Consensus Estimate for earnings is pegged at $1.07, reflecting an increase of 4.3% year over year. Meanwhile, the consensus estimate for revenues is pegged at $16.6 billion, implying a 0.8% growth.
Here is what our quantitative model predicts:
Procter & Gamble has the right combination of two main ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — which is required to be confident of an earnings beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks ESP: The Earnings ESP for Procter & Gamble is +0.33%.
Zacks Rank: Procter & Gamble carries a Zacks Rank #3, which increases the predictive power of ESP.
Procter & Gamble Company (The) Price and EPS Surprise
The company is set to report third-quarter results on Oct 26 before the opening bell.
Mondelez International, Inc. (MDLZ - Free Report) has an Earnings ESP of +0.09% and holds a Zacks Rank #3. The company is set to report quarterly results on Oct 30.
Monster Beverage Corporation (MNST - Free Report) has an Earnings ESP of +0.36% and carries a Zacks Rank #3. The company is expected to report third-quarter results on Nov 2.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
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Will Sales Weakness Hit Procter & Gamble (PG) Q1 Earnings?
The Procter & Gamble Company (PG - Free Report) ) is set to report first-quarter fiscal 2018 results on Oct 20, before the market opens. This consumer goods company has exceeded analysts’ expectations for nine consecutive quarters despite lower sales.
The company has been struggling to boost sales for the last few years. Weak volumes and slowing market growth along with foreign exchange headwind have been hurting its sales. Soft consumer-spending environment in developed markets, particularly in the United States and the United Kingdom, also adds to the worries.
The trend is unlikely to change for the to-be-reported quarter. Softness in the United States, United Kingdom and volatility in developing markets is likely to adversely impact Procter & Gamble’s results. In fact, categories in the company’s largest and most profitable market, the United States (accounting for 42% of total net sales in fiscal 2017), grew barely above flat in fiscal fourth-quarter 2017. The U.S. market growth slowed to just above 1% in fiscal 2017 from over 2% in fiscal 2016. Overall, the company expects fiscal 2018 organic sales growth of 2-3%.
Importantly, Procter & Gamble expects first quarter to witness the lowest organic sales and core earnings per share (EPS) growth of the year, as the period compares against the highest organic growth base period. Top-line headwinds from portfolio choices and the recent Gillette price reduction in the United States will primarily impact the first half of fiscal-2018 results.
Segment Discussion: Fabric & Home Care, comprising about 32% of the total revenues, is expected to get a boost in the first quarter. The Zacks Consensus Estimate for Fabric & Home Care revenues of $5.4 billion reflect growth of 3.5% sequentially and 1.3% from the year-ago quarter. The consensus estimate for Baby, Feminine & Family Care revenues of $4.6 billion indicates an increase of 0.5% from the prior-year quarter.
Again, revenues from Beauty segment are expected to increase 2.1% on a year-over-year basis. Health Care revenues will most likely witness 0.9% growth. However, Grooming revenues is likely to register 2.1% year-over-year revenue decline.
Here are the other factors that might influence Procter & Gamble’s Q1 results:
To counter the tepid sales growth, Procter & Gamble has been benefiting from its ongoing restructuring program aimed at reducing costs and driving efficiency. The company has been taking various restructuring initiatives aimed at generating higher profit and lowering costs. These initiatives have helped the company to accelerate margins growth amid the slowdown in sales.
The company’s focus on reducing its SG&A (selling, general, and administrative) costs and lowering its marketing and advertising spending could boost its operating margins in the coming quarters.
However, lower pricing owing to increased competition in the shave care category, higher commodity costs, a tough retail environment, an unfavorable mix, and year-over-year comparables are anticipated to continue being a drag in its bottom-line growth rate.
For the fiscal first quarter, the Zacks Consensus Estimate for earnings is pegged at $1.07, reflecting an increase of 4.3% year over year. Meanwhile, the consensus estimate for revenues is pegged at $16.6 billion, implying a 0.8% growth.
Here is what our quantitative model predicts:
Procter & Gamble has the right combination of two main ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — which is required to be confident of an earnings beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks ESP: The Earnings ESP for Procter & Gamble is +0.33%.
Zacks Rank: Procter & Gamble carries a Zacks Rank #3, which increases the predictive power of ESP.
Procter & Gamble Company (The) Price and EPS Surprise
Procter & Gamble Company (The) Price and EPS Surprise | Procter & Gamble Company (The) Quote
Stocks Worth a Look
Here are a few consumer staples stocks worth considering as they have the right combination of elements to post an earnings beat this quarter.
The Hershey Company (HSY - Free Report) has an Earnings ESP of +0.13% and carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The company is set to report third-quarter results on Oct 26 before the opening bell.
Mondelez International, Inc. (MDLZ - Free Report) has an Earnings ESP of +0.09% and holds a Zacks Rank #3. The company is set to report quarterly results on Oct 30.
Monster Beverage Corporation (MNST - Free Report) has an Earnings ESP of +0.36% and carries a Zacks Rank #3. The company is expected to report third-quarter results on Nov 2.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>