Earnings Preview: Procter & Gamble

Aug. 2.12 | About: The Procter (PG)

Procter & Gamble Co. (NYSE:PG) is scheduled to report its Q4 2012 results on August 3, 2012, before market opens. The Street expects EPS and revenue of $0.77 and $20.26B, respectively.

In this article, I will recap the historical results of the company, its latest EPS estimates vs. surprises, the latest news from PG and the news from its closest competitors.

Procter & Gamble Co. Revenue and Net Income History

Recent EPS Actuals vs. Estimates

The company has met or beaten analysts' estimates in the last four quarters. In the last quarter, it reported $0.94 EPS, just beating analyst estimates of $0.93.

Procter & Gamble Co. EPS Historical Results vs Estimates

The consensus EPS estimate is $0.77 based on 23 analysts' estimates, down from $0.84 a year ago. Revenue estimates are $20.26B, down from $20.86B a year ago. The median target price by analysts for the stock is $67.00.

Average recommendation: Overweight

Source: Marketwatch

Analyst Upgrades and Downgrades

  • On June 26, 2012, RBC Capital Mkts downgraded the company from Outperform to Sector Perform.
  • On June 26, 2012, Caris & Company reiterated Average rating for the company.
  • On June 25, 2012, Wells Fargo downgraded the company from Strong Buy to Hold.
  • On June 19, 2012, Hilliard Lyons downgraded the company from Long-term Buy to Neutral.
  • On April 29, 2012, Oppenheimer downgraded the company from Outperform to Perform.
  • On February 24, 2012, RBC Capital Mkts reiterated Outperform rating for the company.

Latest News

  • On July 24, 2012, Procter & Gamble Co and the U.S. Environmental Protection Agency (EPA) National Risk Management Research Laboratory (NRMRL) announced the signing of a Cooperative Research and Development Agreement (CRADA) to develop new tools to optimize sustainability improvements in manufacturing facilities, and their associated supply chains.
  • On July 20, 2012, Procter & Gamble Co announced that it has filed a lawsuit against Team Technologies, Inc., a private-label manufacturer and distributor of tooth whitening products.
  • On July 13, 2012, Reuters reported that activist investor William Ackman looks ready to take on management at yet another major company as he builds a stake in Procter & Gamble Co. Ackman's $10 billion Pershing Square Capital Management has been buying shares in P&G for the last few weeks and may want to increase its stake further.
  • On July 10, 2012, Procter & Gamble Co announced that its Board of Directors declared a quarterly dividend of $0.562 per share on the Common Stock and on the Series A and Series B ESOP Convertible Class A Preferred Stock of the Company, payable on or after August 15, 2012 to Common Stock and Series A and Series B ESOP Convertible Class A Preferred Stock shareholders of record at the close of business on July 20, 2012.
  • On June 20, 2012, Procter & Gamble Co announced that for the fourth quarter of 2012, it expects organic sales growth to be in the range of 2%-3%, compared to a prior range of 4%-5%, Foreign exchange to reduce net sales by 4%, net sales to be in the range of down 2%-1% compared to a prior range of an increase of 1%-2%.
  • On June 5, 2012, The Coca-Cola Company, Ford Motor Company, H.J. Heinz Company, NIKE, Inc. and Procter & Gamble announced the formation of the Plant PET Technology Collaborative (PTC), a strategic working group focused on accelerating the development and use of 100% plant-based PET materials and fiber in their products.
  • On May 31, 2012, Kellogg Company announced the completion of its acquisition of Procter & Gamble's Pringles business.
  • On May 15, 2012, Jones Lang LaSalle announced that it is extending its global strategic alliance relationship with The Procter & Gamble Company following Procter & Gamble's competitive selection process to select a commercial facilities service partner.
  • On April 27, 2012, Procter & Gamble Co announced that for fiscal 2012, it expects net sales to increase 4%, organic sales to increase 4%, diluted net earnings per share (EPS) to be in the range of $3.63 to $3.74, which includes a gain of $0.47 to $0.50 on the sale of the Snacks business and core EPS to be in the range of $3.82-$3.88, down 1% to in line versus a base period core EPS of $3.87. For the fourth quarter of 2012, it expects net sales growth to be up 1% to 2%, organic sales to grow 4% to 5%, with continued benefit from pricing.
  • On April 16, 2012, De Longhi SpA and The Procter & Gamble Co (P&G) announced that they have reached an agreement for the perpetual licensing of the Braun brand, owned by P&G, for use within the small kitchen appliance, ironing and selected household appliance categories.
  • On April 5, 2012, Procter & Gamble Co. announced that it filed a lawsuit on April 2, 2012 against Be Well Marketing, Inc., a private-label manufacturer and distributor of tooth whitening products.
  • On February 23, 2012, Reuters reported that Procter & Gamble Co. plans to cut a total of 5,700 nonmanufacturing jobs as part of a new plan to reduce costs by $10 billion by the end of fiscal 2016, Chief Executive Officer Bob McDonald said on Thursday.
  • On February 15, 2012, Kellogg Company announced that it has entered into an agreement to acquire Procter & Gamble's Pringles business for $2.695 billion. The companies expect to complete the transaction in the summer of 2012, pending necessary regulatory approvals.
  • On February 15, 2012, Diamond Foods, Inc. announced that The Procter & Gamble Company (P&G) and Diamond have mutually agreed to terminate Diamond's proposed acquisition of the Pringles business and have released each other from all liabilities related to the proposed acquisition.


Colgate-Palmolive (NYSE:CL), Clorox (NYSE:CLX), Johnson & Johnson (NYSE:JNJ), Kimberly-Clark (NYSE:KMB), and Unilever (NYSE:UL) are considered major competitors for Procter & Gamble and the table below provides the key metrics for these companies and the industry.

Procter & Gamble Co. key ratio comparison with direct competitors

The chart below compares the stock price changes as a percentage for the selected companies for the last one-year period.

PG Chart

PG data by YCharts

Competitors' Latest Development

  • On July 30, 2012, Unilever plc announced that it has signed a definitive agreement for the sale of its North America frozen meals business to ConAgra Foods, Inc. for a total cash consideration of $265 million.
  • On July 26, 2012, Kimberly-Clark Corporation announced that it has increased full-year 2012 share repurchase target to $1.3 billion compared to its previous plan of $900 million to $1.1 billion, reflecting expectations for additional excess cash flow.
  • On July 26, 2012, Kimberly-Clark Corporation announced that adjusted earnings per share in fiscal 2012 are anticipated to be $5.05 to $5.20 versus the Company's previous target of $5.00 to $5.15. According to I/B/E/S Estimates, analysts were expecting the Company to report EPS of $5.15 for fiscal 2012.
  • On July 24, 2012, Reuters reported that Pfizer Inc experimental Alzheimer's disease treatment failed to prove effective in one of four high-stakes late-stage trials in patients with mild to moderate forms of the memory-robbing disease.
  • On July 17, 2012, Johnson & Johnson adjusted earnings guidance for fiscal 2012 to $5.00-$5.07 per share. The Company's guidance excludes the impact of special items and reflects the negative impact of recent currency movements, partially offset by the positive contribution from the Synthes acquisition.
  • On July 16, 2012, Johnson & Johnson announced that its Board of Directors has declared a cash dividend for the third quarter of 2012 of $0.61 per share on the Company's common stock.
  • On July 9, 2012, Reuters reported that Bayer AG and Johnson & Johnson's anti-blood-clotting pill Xarelto won priority review status from the U.S. Food and Drug Administration for the treatment of deep vein thrombosis and pulmonary embolism.
  • On June 22, 2012, Reuters reported that Johnson & Johnson said on June 21, 2012, that U.S. regulators have declined to approve a new use for its Xarelto blood clot preventer to reduce the risk of heart attacks and strokes in patients with acute coronary syndrome.
  • On June 21, 2012, Reuters reported that Johnson & Johnson is close to reaching a settlement with the U.S. Justice Department over allegations it promoted anti psychotic drug Risperdal for unapproved uses that could cost the healthcare conglomerate at least $1.5 billion.
  • On June 14, 2012, Johnson & Johnson announced the completion of the acquisition of Synthes, Inc. for a total purchase price of $19.7 billion in cash and stock. Synthes will be integrated with the DePuy franchise to establish the DePuy Synthes Companies of Johnson & Johnson.
  • On June 14, 2012, Dow Jones reported that Unilever plc (Unilever) announced the reorganization of its United Kingdom activities and closing of a number of sites in United Kingdom, which will affect approximately 500 jobs.
  • On June 13, 2012, Reuters reported that Johnson & Johnson expects to complete its $19.7 billion purchase of Swiss medical device maker Synthes Inc. on Thursday and that the deal will slightly boost company profit this year, rather than being a moderate drag on earnings as previously expected.
  • On June 12, 2012, Reuters reported that Johnson & Johnson has won U.S. antitrust approval to buy Swiss medical device company Synthes Inc if it sells some assets, the Federal Trade Commission said on Monday.
  • On June 5, 2012, Law Office of Brodsky & Smith, LLC announced that it is investigating potential claims against DePuy Orthopedics and its corporate parent Johnson & Johnson on behalf of individuals that received either an DePuy ASR XL Acetabular System or an DePuy ASR Hip Resurfacing System.
  • On May 24, 2012, Reuters reported that U.S. advisers recommended against expanding the use of Johnson & Johnson's blood thinner Xarelto as a way to reduce the risk of new heart attacks and strokes in people with heart problems.
  • On May 17, 2012, Reuters reported that Johnson & Johnson advanced prostate cancer drug, Zytiga, to hormone therapy before surgery has been shown for the first time to eradicate tumors in some men with high-risk forms of the disease.
  • On May 15, 2012, The Clorox Company announced that its board of directors increased the quarterly cash dividend on the Company's common stock by 6.7% , from $0.6 to $0.64 per share.
  • On May 2, 2012, The Clorox Co. announced that for fiscal 2013, it expects sales growth in the range of 2%-4% and Diluted EPS in the range of $4.20-$4.35. For fiscal 2012, it updated its sales guidance and expects sales growth of about 4%, versus the previous outlook of 2%-4% and diluted earnings per share in the range of $4.00-$4.10 for fiscal 2012.

Technical Overview

The stock has a market capitalization of $176.85B and is currently trading at $64.54 with a 52-week range of $57.56-$67.95. The stock's year-to-date performance has been -0.80%. It is currently trading above 20, 50 and 200 SMA.

Sources: Yahoo Finance, Google Finance, Marketwatch, Finviz, Reuters.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.