P&G Beats Q2 Estimates, Upwardly Revises FY20 View

P&G Beats Q2 Estimates, Upwardly Revises FY20 View
January 24, 2020

 

Procter & Gamble Co (NYSE: PG) posted fiscal 2020 second-quarter profits that rose from the previous year and surpassed analysts’ estimates. The company also upwardly revised its fiscal 2020 outlook. However, quarterly revenues fell below the Street estimates for the first time in five quarters. The market focused only on revenue decline and sent the shares down 0.46% or $0.57 to $124.99. In the past year, the stock of P&G, having a market value of $311.70 billion, has appreciated by 31%.

Cincinnati-based P&G posted fiscal 2020 second-quarter revenues of $18.24 billion, an increase of 4.6% from $17.44 billion in the comparable quarter last year. The company’s top line was negatively impacted by a strong dollar and troubled baby care division. Analysts polled by Refinitiv had anticipated revenues of $18.37 billion for the quarter.

For the second quarter, the consumer giant posted earnings of $3.72 billion, or $1.41 per share, compared with $3.19 billion, or $1.22 per share, in the similar period last fiscal year.

Excluding charges, P&G recorded 2Q 2020 adjusted earnings of $3.74 billion, or $1.42 per share, an increase from $3.27 billion or $1.25 a share last year. Analysts surveyed by Thomson Reuters anticipated earnings of $1.37 billion for the quarter.

David Taylor, Chairman, President and CEO, highlighted the company’s impressive performance and guaranteed steady growth in the quarters to come: “We delivered another strong quarter of organic sales growth, core earnings per share and cash returned to shareowners. Our strong first-half results enable us to further increase our outlook for the full fiscal year across each of these metrics and to increase our commitment of cash return to shareowners. Our focus remains on executing our strategies of superiority, productivity, constructive disruption and improving P&G’s organization and culture to deliver balanced top-line and bottom-line growth along with strong cash generation in a challenging competitive and macroeconomic environment.”

Segment-wise,

  • Beauty – reported revenues of $3.598 billion, up 7% from last year. Skin and Personal Care Products, which include SK-II and Olay, saw the organic sales increase by double digits, led by an increase in prices and innovation in premium products.
  • Grooming – posted revenues of $1.658 billion, an increase of 2% from the prior year. Shave Care organic sales rose by low single digits, mainly due to innovation partially negated by a decline in volumes in some markets. P&G’s shaving segment, which includes Gillette and Venus, reported a low-single-digit growth, primarily due to the launch of new products such as Gillette Treo. Earlier this month, the company announced its intention to purchase Billie, a direct-to-consumer shaving firm targeting women.
  • Health care – recorded a 14% y-o-y increase in revenues to $2.530 billion. This division includes brands like Vicks and Oral B.
  • Fabric & Home Care – reported revenues of $5.787 billion, up 4% from the comparable quarter of fiscal 2019. Fabric and Home Care segment, which includes brands like Tide and Ariel, recorded mid-single digits growth led by innovation and favorable products mix.
  • Baby, Feminine & Family Care – revenues increased 1% to $4.582 billion. Baby Care organic faced competition and retailer inventory decrease in Japan.

P&G now anticipates sales growth in the range of 4% to 5% in fiscal 2020, an increase from its earlier range of 3% to 5%. It also anticipates core earnings per share to increase to a range of between 8% and 11%, an increase from its earlier range of 5% to 10%.

The company intends to repurchase more shares in fiscal 2020. P&G now aims to purchase shares worth $7 billion to $8 billion, an increase from $6 billion to $8 billion. During the second-quarter, P&G repurchased $3.50 billion of common stock.

The second-quarter earnings beat and upward revision of the fiscal 2020 outlook is anticipated to turn the stock bullish in the short-term.

The historical price chart indicates that the stock is trading above its 50-day moving average. Additionally, the stochastic oscillator is also in the bullish zone. Therefore, we are expecting the stock to begin a new uptrend in the next few days.

pg - technical analysis - 24th Jan 2020

Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.

Richard W

Richard W

Richard is the guy who know everything there is about the financial industry, working in a top firm for over 15 years, he will give the lowdown on some of the biggest companies in the world


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