Can Procter & Gamble (PG) Beat On Earnings Again In Q1?
Zacks Investment Research | Oct 13, 2019 09:23PM ET
The Procter & Gamble Company (NYSE:PG) is set to report first-quarter fiscal 2020 results on Oct 22, before the opening bell.
The company boasts a robust earnings surprise history, having outpaced estimates for 17 straight quarters now. It delivered average positive earnings surprise of 2.9% in the trailing four quarters. Moreover, the company reported sales beat in seven of the last eight quarters.
Procter & Gamble Company (The) Price and EPS Surprise
industry ’s growth of 0.3%. This indicates a positive sentiment on the stock ahead of earnings. Additionally, the stock has witnessed growth of 51.1% in the past year.
Meanwhile, the company focuses on improving the product portfolio by acquiring complementary businesses. It also follows a systematic divestiture plan to streamline the portfolio. Some of the company’s recent acquisitions — including This is L., First Aid Beauty, the consumer health business of Merck KGaA, and Walker & Company Brands — have bolstered its product portfolio. These acquisitions and divestitures are likely to aid top-line growth in the quarters ahead through a better focus on core businesses.
The company’s various efforts have been aiding organic sales growth. This organic growth is visible in the rise in shipment volume as well as favorable mix and pricing. Notably, all of the company’s business segments contributed to organic sales growth in the last reported quarter.
Driven by robust organic sales performance, management provided upbeat guidance for fiscal 2020. It projects both all-in and organic sales growth of 3-4% in fiscal 2020. Moreover, the company projects core EPS growth of 4-9% for fiscal 2020, whereas it earned $4.52 per share in fiscal 2019.
While the aforementioned factors raise optimism about the upcoming quarterly results, we remain wary of the adverse currency fluctuations. Currency fluctuations hurt net sales to the tune of about 4% and core operating margin by 80 bps in fourth-quarter fiscal 2019. This is also likely to mar results in quarters ahead.
What the Zacks Model Unveils
Our proven model conclusively predicts that Procter & Gamble is likely to beat earnings estimates in the fiscal first quarter. This is because a stock needs to have — a positive Zacks Investment Research
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