Will PG Stock Rise on Fiscal 3Q17 Results?
PG’s stock is behind peers
The chart below shows that YTD (year-to-date), Procter & Gamble (PG) stock has outpaced the S&P 500 (SPX) and the S&P 500 Consumer Staples Index. However, it was behind peers Colgate-Palmolive (CL), Clorox (CLX), and Kimberly-Clark (KMB) by a great deal.
Procter & Gamble stock has risen about 8.0% on a YTD basis as of April 18. Much of this growth stemmed from the disclosure of activist investor Nelson Peltz’s stake in the company. Meanwhile, the company’s focus on core brands, its innovative product pipeline, and costs savings largely boosted investors’ confidence in the stock.
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In comparison, Clorox, Colgate-Palmolive, and Kimberly-Clark have generated superior returns with their share prices rising 13.0%, 13.6%, and 17.3%, respectively, since the start of 2017.
Could PG’s stock rise further?
The one thing that’s holding back Procter & Gamble stock is the company’s tepid sales growth. The industry-wide slowdown, adverse currency movement, and challenges in certain markets are restricting the company’s top-line growth.
However, the company now commands a better portfolio of core brands, which have high velocity and higher margins. Meanwhile, the company’s focus on driving sales growth through innovative products is gathering steam and could accelerate sales growth in coming quarters. Plus, the company’s cost saving initiatives, industry-leading margins, and strong cash-flow-generating capabilities could further boost investor confidence.
Procter & Gamble is slated to announce its fiscal 3Q17 results on April 26. In this series, we’ll discuss the expectations for the company’s sales, earnings, and margins. We’ll also discuss the company’s valuation and analyst recommendations for its stock.
ETF investors seeking exposure to Procter & Gamble might consider the Consumer Staples Select Sector SPDR Fund (XLP), which invests 12.1% of its portfolio in the company.
We’ll discuss the company’s earnings trends in the next part of this series.