We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Procter & Gamble (PG) Q2 Earnings: Stock to Disappoint?
Read MoreHide Full Article
The Procter & Gamble Company (PG - Free Report) is set to report second-quarter fiscal 2017 results on Jan 20, before the market opens. Last quarter, it posted a positive earnings surprise of 5.10%.
In fact, despite sales remaining subdued, the consumer goods company posted positive earnings surprises in the past four quarters, with the average being 6.04%.
Let’s see how things are shaping up for this announcement.
Factors to Consider
Though the company refrained from providing guidance for the second quarter, we expect modest sequential sales improvement through fiscal 2017. Negative Fx impact, moderate anticipated input cost inflation and continued geopolitical uncertainty may limit upside.
The company expects organic sales growth of around 2% compared with fiscal 2016 and a 1% impact due to currency movements leaving overall almost flat sales guidance of around +1%.
Procter & Gamble has been struggling to boost sales over the past few quarters. Significant negative Fx impact, weak volumes, divestures and slowing market growth have been impacting sales.
Fx has always been a deterrent for Procter & Gamble with around 60% of the company’s business being outside North America. Fx impacted the company’s revenue growth by 6% in both fiscal 2015 and 2016. While the company expects Fx to be a nominal headwind for fiscal 2017, it is likely to impact results in the second quarter as well.
Overall, pricing gains, productivity savings and lower overhead costs should provide bottom-line support despite top-line pressure as witnessed in the past few quarters.
It is evident from the company’s last reported quarter that currency headwinds, unfavorable mix, innovation and capacity investments, and higher commodity costs were offset by productivity cost savings and higher volume benefits. Core gross margin expanded 50 basis points (bps) to 51.6% in the quarter.
Again, core operating margin expanded 20 bps to 23.4% on productivity cost savings. Procter & Gamble has undertaken an aggressive cost-cutting plan to reduce spending across all areas like supply chain, research & development, marketing and overheads.
It is to be noted that Procter & Gamble is considered a darling by dividend investors having an uninterrupted 59-year-long streak of dividend growth. The stock currently boasts a dividend yield of 3.2% and so far does not reflect any currency headwind.
For the fiscal second quarter, the Zacks Consensus Estimate for earnings is pegged at $1.07, reflecting an increase of 2.7% year over year. Meanwhile, the consensus estimate for revenues is pegged at $16.84 billion, implying a 0.4% decline.
What Our Model Indicates
Our proven model does not conclusively show that Procter & Gamble is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to be able to beat expectations. But that is not the case here as you will see below.
Zacks ESP: The Earnings ESP is -0.94% as the Most Accurate estimate stands at $1.06 while the Zacks Consensus Estimate is pegged at $1.07. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: The company carries a Zacks Rank #4 (Sell). Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Procter & Gamble Company (The) Price and EPS Surprise
Monster Beverage Corporation (MNST - Free Report) has an earnings ESP of +6.67% and a Zacks Rank #3. The company is expected to quarterly results on Feb 23.
Lancaster Colony Corporation (LANC - Free Report) has an earnings ESP of +1.45% and a Zacks Rank #3. The company is expected to quarterly results on Jan 26.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017?
Who wouldn't? As of early December, the 2016 Top 10 produced 5 double-digit winners including oil and natural gas giant Pioneer Natural Resources which racked up a stellar +50% gain. The new list is painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. Be among the very first to see it>>
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Procter & Gamble (PG) Q2 Earnings: Stock to Disappoint?
The Procter & Gamble Company (PG - Free Report) is set to report second-quarter fiscal 2017 results on Jan 20, before the market opens. Last quarter, it posted a positive earnings surprise of 5.10%.
In fact, despite sales remaining subdued, the consumer goods company posted positive earnings surprises in the past four quarters, with the average being 6.04%.
Let’s see how things are shaping up for this announcement.
Factors to Consider
Though the company refrained from providing guidance for the second quarter, we expect modest sequential sales improvement through fiscal 2017. Negative Fx impact, moderate anticipated input cost inflation and continued geopolitical uncertainty may limit upside.
The company expects organic sales growth of around 2% compared with fiscal 2016 and a 1% impact due to currency movements leaving overall almost flat sales guidance of around +1%.
Procter & Gamble has been struggling to boost sales over the past few quarters. Significant negative Fx impact, weak volumes, divestures and slowing market growth have been impacting sales.
Fx has always been a deterrent for Procter & Gamble with around 60% of the company’s business being outside North America. Fx impacted the company’s revenue growth by 6% in both fiscal 2015 and 2016. While the company expects Fx to be a nominal headwind for fiscal 2017, it is likely to impact results in the second quarter as well.
Overall, pricing gains, productivity savings and lower overhead costs should provide bottom-line support despite top-line pressure as witnessed in the past few quarters.
It is evident from the company’s last reported quarter that currency headwinds, unfavorable mix, innovation and capacity investments, and higher commodity costs were offset by productivity cost savings and higher volume benefits. Core gross margin expanded 50 basis points (bps) to 51.6% in the quarter.
Again, core operating margin expanded 20 bps to 23.4% on productivity cost savings. Procter & Gamble has undertaken an aggressive cost-cutting plan to reduce spending across all areas like supply chain, research & development, marketing and overheads.
It is to be noted that Procter & Gamble is considered a darling by dividend investors having an uninterrupted 59-year-long streak of dividend growth. The stock currently boasts a dividend yield of 3.2% and so far does not reflect any currency headwind.
For the fiscal second quarter, the Zacks Consensus Estimate for earnings is pegged at $1.07, reflecting an increase of 2.7% year over year. Meanwhile, the consensus estimate for revenues is pegged at $16.84 billion, implying a 0.4% decline.
What Our Model Indicates
Our proven model does not conclusively show that Procter & Gamble is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to be able to beat expectations. But that is not the case here as you will see below.
Zacks ESP: The Earnings ESP is -0.94% as the Most Accurate estimate stands at $1.06 while the Zacks Consensus Estimate is pegged at $1.07. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: The company carries a Zacks Rank #4 (Sell). Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Procter & Gamble Company (The) Price and EPS Surprise
Procter & Gamble Company (The) Price and EPS Surprise | Procter & Gamble Company (The) Quote
Stocks to Consider
Some stocks in the consumer staples sector that have both a positive Earnings ESP and a favorable Zacks Rank include:
Coty Inc. (COTY - Free Report) , expected to report quarterly results on Feb 2, has an earnings ESP of +8.33% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Monster Beverage Corporation (MNST - Free Report) has an earnings ESP of +6.67% and a Zacks Rank #3. The company is expected to quarterly results on Feb 23.
Lancaster Colony Corporation (LANC - Free Report) has an earnings ESP of +1.45% and a Zacks Rank #3. The company is expected to quarterly results on Jan 26.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017?
Who wouldn't? As of early December, the 2016 Top 10 produced 5 double-digit winners including oil and natural gas giant Pioneer Natural Resources which racked up a stellar +50% gain. The new list is painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. Be among the very first to see it>>