The Procter & Gamble Company (PG) has seen growth driven by robust pricing and a favorable mix, alongside strength across its segments. With a focus on productivity and cost-saving initiatives, the company is well-positioned to enhance margins soon, while continued investments in its business also contribute positively.
In the second quarter of fiscal 2024, PG exceeded consensus expectations for the sixth consecutive quarter, with improvements in both sales and earnings compared to the previous year. Organic sales growth was particularly notable, propelled by strong pricing and segment performance.
Shares of PG, ranked #2 (Buy) by Zacks, have outperformed the industry, rising by 2.1% over the past three months, despite a decline in the Consumer Staples sector.
The Zacks Consensus Estimate for PG’s current financial year indicates a 3.5% increase in sales and a 9.3% increase in earnings compared to the previous year.
Key factors driving PG’s growth include its essential role in meeting consumers’ daily health, hygiene, and cleaning needs worldwide. The company experienced continued momentum in the fiscal second quarter, with organic sales benefiting from brand strength and effective strategies.
On an organic basis, revenues grew by 4% year over year, driven by a 4% increase in pricing and stable product mix and volume. All segments of the company reported organic sales growth, with particularly strong performances in Grooming and Fabric & Home Care.
PG remains committed to productivity and cost-saving measures to enhance margins. Its ongoing investments in the business, coupled with efforts to counteract macro cost pressures, demonstrate its commitment to balancing growth and efficiency.
With its supply chain 3.0 program introduced in fiscal 2023, PG aims to achieve improved capacity, agility, and productivity, anticipating benefits of $800 million after tax in fiscal 2024 from favorable commodity costs.
For fiscal 2024, PG expects year-over-year sales growth of 2-4%, with organic sales projected to increase by 4-5%. Core EPS is forecasted to rise by 6-9% to $6.37-$6.43.
Despite challenges such as cost headwinds and inflation, PG’s solid demand, brand strength, and productivity efforts are expected to sustain its growth trajectory.
In addition to PG, investors may consider other top-ranked stocks in the Consumer Staples sector, including Colgate-Palmolive (CL), Molson Coors (TAP), and Diageo (DEO).
CL, currently ranked #2 by Zacks, has shown consistent earnings surprises and is poised for sales and earnings growth in the current financial year.
TAP, another Zacks #2 ranked stock, has also demonstrated earnings surprises and is expected to see growth in sales and earnings for the current financial year.
DEO, with a Zacks #2 rank, is anticipated to achieve sales growth in the current financial year, although earnings are expected to decline slightly.
Zacks has identified a “Single Best Pick to Double,” a chemical company with significant upside potential driven by strong demand, robust earnings estimates, and a share repurchase program. This company could rival or surpass other recent Zacks’ top performers.
