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Procter & Gamble Long

by SignalFactory   ·  October 19, 2020 | 13:02:59 UTC  

Procter & Gamble Long

by SignalFactory   ·  October 19, 2020 | 13:02:59 UTC  

The consumer staples leader Procter & Gamble (NYSE:PG) will publish the first-quarter results of its fiscal year 2021 on Tuesday, Oct 20, before the opening bell.. The consumer staples giant has attracted more investor attention lately as the pandemic has Wall Street looking for steady sources of growth, cash flow, and dividend income.

Procter & Gamble surpassed expectations on core metrics like these in each of its last few earnings reports and has a good shot at surprising investors again.

Procter & Gamble’s sales have been gaining from the spike in demand for household cleaning, personal health and cleansing products, mostly in North America and China, since the onset of the coronavirus pandemic. Notably, the relevance of the company’s products and categories in consumers’ lives has increased with the pandemic. We expect that the increased focus on home, more time at home, and more meals at home with related consumption impacts are likely to have contributed to Procter & Gamble’s performance in the to-be-reported quarter.

Procter & Gamble was in the middle of its best expansion pace in years when the pandemic struck and pushed demand up to new levels. Panic-buying and pantry-stuffing for products like Tide detergent and Bounty paper towels pushed organic sales higher by 10% during the peak shutdown period in April and May.

In late July the company gave investors a few reasons to follow this metric closely when it revealed a growth slowdown to 6% in the fiscal fourth quarter. That beat expectations and suggested a strong market share performance against peers like Kimberly-Clark. But the figure suggested growth might continue decelerating in fiscal 2021.

That’s exactly what CEO David Taylor and his team have predicted for the fiscal year that just started, and this quarterly report will add context to that conservative forecast. Beyond the headline number, keep an eye on the balance between rising volumes and increased prices. Another period of volume-led sales growth at 4% or above would be great news for the strength of the business.

Moreover, we predict that the first-quarter fiscal 2021 performance is likely to have benefited from the continued functioning of its businesses and strong demand for its products. It is expected to have witnessed continued growth in organic sales, driven by a continued increase in organic shipment volume and better pricing.

Management has also been focusing on productivity and cost-saving plans, which might have cushioned margins in first-quarter fiscal 2021. It has been driving cost savings and efficiency improvement in all facets of business, delivering strong cost and cash productivity.

While the aforementioned factors raise optimism about the upcoming quarterly results, we remain wary of the adverse impacts of currency fluctuations on the company’s top and bottom lines.

Zacks Model:

Procter & Gamble carries a Zacks Rank #2 and an Earnings ESP of +1.52%.

Procter & Gamble LONG (Buy)

ENTER AT: 146.09

T.P_1: 156.64

T.P_2: 175.21

T.P_3: 186.61

S.L: 135.91

Procter & Gamble
Procter & Gamble
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