Procter & Gamble Posted Strong Q2 Results, Stock Rose ~5%



Sales and EPS beat the expectations

On January 23, Procter & Gamble (PG) shares closed at 4.9%. The company posted impressive results for the second quarter of fiscal 2019 (for the period ending December 31). Procter & Gamble’s top line remained flat on a YoY (year-over-year) basis. The top line beat analysts’ expectation due to the sustained momentum in organic sales. The company’s organic sales increased 4% during the second quarter due to higher pricing, innovation-led products, a favorable mix, and improved volumes.

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Procter & Gamble’s margins remained weak. Unfavorable currency exchange rates, inflation in commodities, and higher transportation costs impacted the margins. Despite pressure on the margins, improved organic sales, productivity savings, and a lower effective tax rate drove the company’s second-quarter earnings. Procter & Gamble’s earnings beat analysts’ expectations.

Kimberly-Clark (KMB), which reported its fourth-quarter results on January 23, also posted healthy organic sales growth. However, the stock closed 2.7% lower due to weaker-than-expected earnings growth.

Buoyed by stronger-than-expected results for the first half of fiscal 2019, Procter & Gamble increased the upper range of its fiscal organic sales guidance, which is encouraging. However, competition and cost headwinds are expected to remain a drag.

Stock performance in 2019

So far, Procter & Gamble stock has risen 3.2% in 2019 (as of January 23). In comparison, the benchmark index (SPX) has risen 5.3%. Clorox (CLX), Kimberly-Clark (KMB), and Church & Dwight (CHD) stock is trading in the red. Colgate-Palmolive (CL) stock has risen 4.8%.


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