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P&G raises annual sales outlook, CFO says consumers' buying 'habits will last beyond COVID'

Brian Sozzi
·Editor-at-Large
·2 min read

The new normal for P&G (PG) so long as COVID-19 is in the lives of households globally: big quarterly earnings days.

P&G shares popped 2% in pre-market trading on Tuesday as the maker of Tide detergent and Gillette razors hit all the right notes in its fiscal first quarter. Shares are likely to open near a record high, per Yahoo Finance Premium data. Fueled by consumers continuing to restock their cupboards during the pandemic, P&G saw sales strength across the board (notably in personal care, oral care and fabric care) and operating margins rose 300 basis points year-over-year.

Here’s how P&G performed versus Wall Street estimates:

  • Net Sales: $19.3 billion vs. $18.4 billion estimate

  • Organic Revenue Growth: +9% versus estimates for +4.7%

  • Diluted EPS: $1.63 versus estimates for $1.42 a share

  • Full-Year Guidance:

    • Organic Sales Growth: +4% to +5% (previous: +2% to +4%)

    • Diluted EPS: +5% to +8% (previous: +5% to +7%)

The company lifted its full-year sales and earnings outlooks.

P&G Vice Chairman and CFO Jon Moeller told Yahoo Finance’s The First Trade the quarter reflects new spending habits by consumers that are unlikely to change anytime soon. He did, however, stop short of saying P&G’s recent growth rates are the new normal amid a world stricken by a pandemic.

“Many of these changes and habits will last beyond COVID,” Moeller said.

Investors who thought consumer re-stocking during the pandemic would subside are being proven wrong. To Moeller’s point, new behaviors appear to have been formed throughout a challenging year. People are cleaning more and taking better care of themselves as they don’t have to rush to meetings or overseas trips. Similar behavior was seen at Lysol maker Reckitt Benckiser Tuesday morning — the company lifted its full-year guidance following a strong quarter of its own.

And it’s not just cleaning products experiencing steady demand from consumers spending more time at home. CEOs from frozen food giant Conagra to Corona beer maker Constellation have told Yahoo Finance recently the great stock up trend of 2020 remains in effect.

All of this begs the question for investors: Do already richly valued consumer staple companies deserve to be re-rated higher at least one more time for this apparent new normal of consumer demand? Perhaps, to say the very least.

Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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