To The Moon

Earlier this month (April), we saw $Procter & Gamble(PG)$ announced a hike in its quarterly dividend by 7% to $1.0065 per share. This has make it one of Wall Street's best dividend stocks, with PG having raised its payout for 68 consecutive years.

With the fiscal third-quarter earnings report due before 19 April 2024 (Friday) market open, P&G is expected to report earnings of $1.31 per share (-4.4% YoY) on revenue of $19.0 billion (-5.5% YoY).

P&G’s margin performance which have been above its pre-pandemic levels, and with its strong cash position, stock buyback program and healthy delta between its free cash flow and allocation strategies should be able to withstand any volatility in its stock price.

If the top-line sales were to be less-than-expected, the free cash flow strategy should be able to bring them forward. P&G quarterly revenue is expected to be higher because of the growth in sales of home care and healthcare products.

P&G Shares Outperform Dow Jones Industrial Average and Consumer Staples Sector.

If we look at how P&G shares have been performing +3.80% on a 1 year chart among its peers in the consumer staples sector. This would mean that there is probably a high chance that P&G would continue to register positive upside gains.

As mentioned above, P&G is indeed much better that the 0.24% performance by the consumer staples returns. This could mean that investors are most optimistic about the Personal Products industry.

The Household Products industry is expected to see its earnings grow by 8.2% per year over the next few years.

Procter & Gamble (PG) Last Reported Earnings and Implied Straddle

PG last reported earnings on 23 Jan 2024 before the market opened (BMO). PG shares gained +4.1% the day following the earnings announcement to close at 153.98. Following its earnings release, 85 days ago, PG stock has drifted +1.3% higher.

From the time it announced earnings, PG traded in a range between 152.06 and 163.14. The last price (155.95) is closer to the lower end of range.

Estimated implied straddle for upcoming earnings is 2.7%. Looking at the past quarter earnings, we could see that price effect have been on the positive side, largely because of the free cash flow strategy that could have helped P&G to navigate any surprise from any slower outlook guidance.

Procter & Gamble Stock Price Does Not Suggest Investors Strong Interest

Even though analyst have been anticipating that P&G could beat the revenue forecast, and the earnings per share should come in pretty strong. With the dividends announced, we are not seeing very strong traders and investors interest in getting this stock.

There might be reasons due to the interest rate ambiguity, and investors are relatively neutral on the American Consumer Staples industry at the moment, indicating that they anticipate long term growth rates to remain steady.

Summary

Even though the analyst expectation and forecast seem to look for a strong revenue and earnings per share, there might be a chance that P&G outlook for its top-line for 2024 would be key.

The sentiment on how the U.S. Consumer Staples Sector have changed over the years, and how revenues have been affected, would P&G be the beneficiary of this rise in American consumer staples sector as consumer spending seem to suggest that they are confident to spend on essentials.

Appreciate if you could share your thoughts in the comment section whether you think P&G forecast and outlook for 2024 would improve with consumer spending rising, and rate cut seem to be ambiguous for now?

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.