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Weak Q1 2019 Results Could Dent Procter & Gamble Stock

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Analysts see weakness in PG’s Q1 2019

On October 19, Procter & Gamble (PG) plans to announce its earnings for the first quarter of fiscal 2019, which ended on September 30. However, analysts have a dim outlook for the quarter, which could hurt investor sentiment and PG stock.

Analysts expect Procter & Gamble’s top line to mark a YoY (year-over-year) decline in the quarter, particularly its Grooming and Baby Care segment. Increased competition from local and private label players, adverse currency rates, and macroeconomic challenges in certain regions are also expected to subdue its growth.

Soft sales and higher input and logistics costs are expected to more than offset the benefits from cost and productivity savings, hurting Procter & Gamble’s margins. Analysts expect the company’s margins to remain weak in the first quarter of fiscal 2019.

Although analysts expect Procter & Gamble’s bottom line to improve on a year-over-year basis, the projected rate of growth isn’t expected to sit well with investors. Analysts expect low single-digit growth in Procter & Gamble’s bottom line.

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PG stock has disappointed so far

On October 10, Procter & Gamble (PG) stock was down 11.4% on a year-to-date basis. PG stock has underperformed the S&P 500 Index (SPX), which is up 4.2% year-to-date. Given the company’s weak outlook in the near term, Procter & Gamble stock could end 2018 in the red.

Procter & Gamble’s peers aren’t faring much better. Weak top-line numbers and margin headwinds have taken a toll on their financials and stock prices. Kimberly-Clark (KMB) stock has fallen 6.4% year-to-date, and Colgate-Palmolive (CL) stock has fallen 15.4% year-to-date. Clorox (CLX) stock has marked a 0.8% decline during the same period.

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