uploads///PG EPS

Can Procter & Gamble Beat Bottom-Line Estimates in 3Q?



What analysts expect for 3Q17

Procter & Gamble (PG) is slated to report its fiscal 3Q17 results on Wednesday, April 26. On average, analysts expect the company to report adjusted EPS (earnings per share) of $0.94, representing a YoY (year-over-year) growth of 9.3%. The projected increase also compares favorably to the expected bottom-line growth of the company’s peers for their upcoming quarter.

Analysts expect Kimberly-Clark (KMB), Colgate-Palmolive (CL), and Clorox (CLX) to witness a 1.5%, 4.7%, and 7.3% growth in their bottom-line results for their upcoming quarters.

Article continues below advertisement

What cushions the bottom line?

Procter & Gamble has exceeded analysts’ earnings expectations in the past seven quarters thanks to its stringent cost control measures. Moreover, share buybacks further cushioned the bottom-line results.

During the last reported quarter, Procter & Gamble’s adjusted EPS of $1.08 rose 3.8% on a YoY basis and surpassed the analyst estimate. Sequentially, the bottom-line growth was lower than the fiscal 1Q17 growth of 5.1%, but it was way better than the 1.9% decline the company saw in fiscal 2Q16 thanks to the stark improvement in margins.

Going forward, the company is betting big on innovation to drive top-line and bottom-line growth. However, it’s the productivity and cost savings that are expected to lift the company’s financial performance in the coming quarter, as the consumer products industry is struggling due to the tough operating environment. Increased competition is leading to lower net selling prices. Meanwhile, slow growth in emerging markets and adverse currency movement are likely to remain a drag in the near term.

For 2017, management expects its adjusted EPS growth to be in the mid-single digits as compared to its adjusted EPS of $3.67 in fiscal 2016.

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.


More From Market Realist