Procter & Gamble: Corrective Measures, Positive Expected Performance Ensure A Buy

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Procter & Gamble (NYSE:PG) is among the world's leading retail goods companies and has a diverse geographical revenue base. The company seems to be on track to deliver a healthy financial performance since the induction of new CEO, Mr. Lafley. PG has significant emerging market exposure; almost 40% of the company's sales are generated from emerging markets, which remains an important long-term earnings growth driver for the company. Also, the company's new product initiatives and cost reduction efforts are likely to fuel the company's sales and earnings growth. Moreover, the company offers a solid dividend yield of 3% and has an aggressive share repurchase program, which is likely to boost EPS in the future. Therefore, I recommend a 'buy' rating for the stock.

Financial Performance Q1 FY2014
Last week, the company reported healthy financial results for Q1 FY2014, which marks a solid start to fiscal year 2014. The company reported an EPS of $1.04 for the quarter, up from $0.96 in the corresponding period last year. The adjusted EPS came out to be $1.05, in line with analyst estimates. The company also experienced a sales growth of 2.2%, resulting in quarterly sales of $21.2 billion, beating analyst expectations of $21.1 billion. As the company has significant international market exposure, foreign currency movements shaved away 2% of total sales for the quarter. Results for the quarter were positively affected by the increased sales of baby products and home-care goods.

Sales of the company's largest segment, Fabric and Home Care unit, which comprised approximately one-third of PG's sales last year, experienced an organic sales increase of 6% year-on-year, beating consensus estimates of 3%. PG's Baby, Feminine and Family Care segment also experienced an organic sales growth of 6% year-on-year, better than consensus estimates of 5%. The fundamentals for both the abovementioned segments remain strong, as the organic growths of

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Blue River. Views are mine, not representing anyone. Not active on the forum these days, as I am doing a PhD in the U.K (UoS - SUMS).

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