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The Procter & Gamble Company (NYSE: PG ) has been a dominant player in the consumer goods market, with a legacy that is unmatched. As a testament to the company’s efficient business model, the stock outperformed the S&P 500 index in 2022, a challenging year for the broad market.
Although the stock suffered a big loss in October last year, ahead of the last earnings, it bounced back and is probably on the way to return to the record high of last year. PG’s performance in the last week of last year and early 2023 was marked by high volatility. But the stock remained largely unaffected by the recent selloff.
Evaluation
High valuations, relative to earnings, are a dampener, especially at a time when consumer sentiment is under pressure due to high inflation and macro uncertainty. The Cincinnati-based beauty & personal care company’s second quarter report will play an important role in making investment decisions this year. So, it makes sense to assess the results before buying/selling stocks.
The Procter & Gamble Company Q1 2023 Earnings Call Transcript
Declining sales amid a shift in people’s shopping behavior are a concern for the company, for which 2022 is a good year. Meanwhile, returning capital to shareholders is a priority for management, a good strategy for long-term shareholders.
The weakness seen in the early months of the fiscal year is expected to continue in the second quarter. Consensus estimates were for a 4% decline in earnings to $1.59 per share, which reflected a 1.4% decline in sales to $20.67 billion. The company will publish the data on January 19.
Core profit, which excludes non-recurring items, fell 2% annually to $1.57 per share in the three months ending September 2022, but exceeded expectations, as has happened in each of the past quarters. Net sales are up to about $20 billion.
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Commenting on management’s outlook for the fiscal year, company CFO Andre Schulten said during the earnings call, “We expect more volatility in costs, currencies and consumer dynamics, as we move through the fiscal year. However, we think the strategy we have chosen, the investments we have made and our focus on execution excellence have enabled us to overcome this volatility over time.
After the earnings, Procter and Gamble shares are currently trading above their long-term averages. The stock, which has gained 16% since its last earnings announcement, remained slightly above $150 on Friday.
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