Certain companies are not supposed to shrink because people will always need their products. That was supposed to be the case with Procter & Gamble (PG) which makes staple goods such as toothpaste that all consumers will purchase in good times and bad. However, it appears that even this business formula is not immune to a lack of consumer confidence, and this reality is likely be reflected in Friday’s second quarter earnings report.
Although Procter & Gamble has outperformed the consensus analyst estimate for the last three quarters, most expect this report to show earnings of only 77 cents per share, down from 94 cents per share in the first quarter. This would be in line with the company’s expectations considering they recently lowered its earnings estimate ahead of Friday’s announcement. They also expect sales to have contracted by 1-2%. Fifteen brokers have established a median target price of $67 with $60 being the lowest estimate.
At the heart of P&G’s lackluster performance is an uncertain macroeconomic environment that is dissuading people around the world from spending freely, even on the most basic of products. The higher cost of commodities and unfavorable foreign exchange rates in relation to the US dollar could also be factors. However, several of the firm’s biggest competitors have fared much better in this environment, and this is something that corporate management may have to answer to soon.
Business Section: Investment Ideas
Procter & Gamble has historically been as strong of an indicator of where consumers think the economy is going as any corporation. While the company has faced shrinking operating margins in the last few years, it is still a firm that many investors look to as a bellwether for the market in general. For this reason alone, Fridays report is worth keeping an eye on.
Below is a chart detailing how the company has performed recently against the S&P 500 benchmark.
We have assembled a list of the firm and its competitors to help you start your research.
1. Procter & Gamble Co. (PG, Earnings, Analysts, Financials): Provides consumer packaged goods in the United States and internationally. Market cap at $175.39B, most recent closing price at $63.56.
2. Colgate-Palmolive Co. (CL, Earnings, Analysts, Financials): Manufactures and markets consumer products worldwide. Market cap at $50.87B, most recent closing price at $105.72.
3. The Clorox Company (CLX, Earnings, Analysts, Financials): Engages in the research and development, manufacture, and sale of various products in the health care field worldwide. Market cap at $190.54B, most recent closing price at $68.94.
4. Johnson & Johnson (JNJ, Earnings, Analysts, Financials): Engages in the research and development, manufacture, and sale of various products in the health care field worldwide. Market cap at $190.54B, most recent closing price at $68.94.
5. Kimberly-Clark Corporation (KMB, Earnings, Analysts, Financials): Engages in the manufacture and marketing of health care products worldwide. Market cap at $34.18B, most recent closing price at $87.10.
6. Unilever plc (UL, Earnings, Analysts, Financials): Provides fast-moving consumer goods in Asia, Africa, Europe, and the Americas. Market cap at $102.64B, most recent closing price at $35.70.
Written by Dan Connelly
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Dig Deeper: Access Company Snapshots, Charts, Filings
- Procter & Gamble Co. (PG, Chart, Download SEC Filings)
- Colgate-Palmolive Co. (CL, Chart, Download SEC Filings)
- The Clorox Company (CLX, Chart, Download SEC Filings)
- Johnson & Johnson (JNJ, Chart, Download SEC Filings)
- Kimberly-Clark Corporation (KMB, Chart, Download SEC Filings)
- Unilever plc (UL, Chart, Download SEC Filings)
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