The Procter & Gamble Company PG looks like a favorable investment pick at the moment, even amid the coronavirus scares. The reason for Procter & Gamble’s strong run on the bourses seems simple enough. Its products play a key role in meeting the daily health, hygiene and cleaning needs of consumers around the world. This led to increased consumer demand for its products during the coronavirus pandemic when consumers are essentially at home to curb the spread of the virus. With this in mind, investors might want to consider buying the Procter & Gamble stock.
Notably, the company’s shares have risen 6.1% in the past year compared with the industry’s growth of 2.6%. Additionally, the Zacks Rank #2 (Buy) stock rallied 8.4% in the past three months, which also reflected its strong earnings results for third-quarter fiscal 2020.
Essentially, the company has been gaining from its efforts to make its cleaning and personal care products available in recent months despite the lockdowns, which helped it to bolster sales. Moreover, it witnessed an increased demand for hand soaps, detergents and surface cleaning products during the pandemic.
Notably, the company operated its 108 manufacturing plants for undisrupted supplies of essentials amid the coronavirus outbreak. Further, its product-supply planning and logistics organization played an essential role in supplying goods. It set records of volume produced and shipped across North America, Europe, Latin America and other parts of the world. These efforts primarily resulted in the robust top and bottom-line performance in the fiscal third quarter.
Another company that displayed immense strength amid the coronavirus outbreak-led volatility is The Clorox Company CLX. It remains strong footed for obvious reasons. Its disinfectant wipes, sprays, bleach, floor cleaners and other products remained in great demand during the coronavirus pandemic. Its products flew off the store shelves due to increased demand from consumers, healthcare professionals and others to clean surfaces as often as possible.
Coming back to Procter & Gamble, the company’s fiscal third-quarter performance also benefited from the significant increase in sales volume, related fixed-cost leverage and ongoing productivity efforts. This was partly offset by currency headwinds and higher operational costs related to the coronavirus outbreak.
The top line gained from organic sales growth of 6%, driven by a rise in organic shipment volume and better pricing. Strong consumer demand for the company’s products in North America and certain European markets due to the COVID-19 pandemic led to the rise in organic shipment volume. This was partly negated by a volume decline in some Asian markets due to the temporary disruption of consumer access to retail markets due to the pandemic. Moreover, all of the company’s business segments, except for Grooming, reported growth in organic sales.
All the more, Procter & Gamble remains focused on productivity and cost-saving plans to boost margins. Continued investment in the business alongside efforts to offset macro cost headwinds, and balanced top and bottom-line growth underscores its productivity efforts. It is witnessing cost savings and efficiency improvements across all facets of business in the second five-year (fiscal 2017-2021) productivity program of $10 billion.
Moreover, for fiscal 2020, the company reaffirmed its organic sales guidance of 4-5% growth. Moreover, it reiterated core EPS growth guidance of 8-11% year over year compared with $4.52 per share reported in fiscal 2019.
Although the disruptions of the COVID-19 outbreak seem to be easing out, the demand for the company’s products is likely to be on the rise due to concerns related to the coronavirus infections. In all likelihood, Procter & Gamble, with a long-term earnings growth rate of 7.2% and a VGM Score of B, indicates further growth ahead.
Don’t Miss These Other Solid Picks
Helen of Troy Limited HELE has a long-term earnings growth rate of 8% and it currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Estee Lauder Companies Inc. EL has a long-term earnings growth rate of 9.6% and a Zacks Rank #2.
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