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Procter & Gamble (PG) Q1 Earnings & Sales Top, View Intact

The Procter & Gamble Company’s PG first-quarter fiscal 2017 earnings and revenues exceeded expectations.

P&G’s fiscal first-quarter adjusted earnings of $1.03 per share beat the Zacks Consensus Estimate of 98 cents by 5.1%. The bottom line also increased 5% from the prior-year quarter. Currency-neutral core EPS per share improved 12% on higher volumes.

Sales in Details

P&G’s reported net sales of $16.52 billion beat the Zacks Consensus Estimate of $16.46 billion by 0.4%. The top line, however, remained unchanged year over year. Foreign exchange had a negative impact of 3% on sales.
    
Organically (excluding the impact of acquisitions, divestitures and foreign exchange), revenues grew 3% on the back of a 3% increase in organic shipment volumes.

All the five business segments recorded positive organic sales growth. Health Care and Fabric & Home Care segments reported 7% and 4% growth, respectively, in the fiscal first quarter. Beauty and Grooming segments witnessed 3% organic sales growth, whereas Baby, Feminine & Family Care segment reported 2%.

Rising Margins

Core gross margin expanded 50 basis points (bps) to 51.6% as productivity cost savings and higher volume benefits were offset by currency headwinds, unfavorable mix, innovation and capacity investments and higher commodity costs.

Core selling, general and administrative expense (SG&A) margin increased 40 bps (as a percentage of sales) to 28.3% owing to benefits from overhead and marketing spending reductions due to productivity efforts. Core operating margin expanded 20 bps to 23.4% owing to productivity cost savings.

P&G has undertaken an aggressive cost-cutting plan to reduce spending across all areas like supply chain, research & development, marketing and overheads.

Financials

As of Sep 30, 2016, the company’s cash and cash equivalents were $7,456 million, up from $7,102 million at the end of fiscal 2016 (as of Jun 30, 2016). Long-term debt was $18,910 million as of Sep 30, 2016, slightly down from $18,945 million at fiscal 2016-end.

Cash flow from operating activities were $3,025 million during the quarter, down from $3,538 million a year ago.

Fiscal 2017 Guidance

The Cincinnati-based company maintained its organic sales growth projection at approximately 2% for fiscal 2017. It expects the combined foreign exchange headwind and minor brand divestitures to reduce sales by about 1 percentage points. P&G estimates all-in sales growth of about 1% for fiscal 2017.

Core earnings per share are expected to grow in mid-single digits as against the fiscal 2016 core earnings of $3.67 per share.

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 is slated to release its quarterly numbers on Oct 27. The Zacks Consensus Estimate for earnings is pegged at 73 cents.

The Clorox Company CLX is slated to release its quarterly numbers on Nov 2. The Zacks Consensus Estimate for the bottom line is pegged at $1.42.

Church & Dwight Co. Inc. CHD is slated to release its quarterly numbers on Nov 3. The Zacks Consensus Estimate for earnings is pegged at 47 cents.

PROCTER & GAMBL Price, Consensus and EPS Surprise

 

PROCTER & GAMBL Price, Consensus and EPS Surprise | PROCTER & GAMBL Quote

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PROCTER & GAMBL (PG): Free Stock Analysis Report
 
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