Procter & Gamble (NYSE:PG) will reports quarterly results this week as earnings season picks up.
Consensus expectations are for revenue of $19.3B, with organic growth of 6.4% and EPS of $1.51. The company has topped forecasts for the last four quarters.
Analysts think the cadence from P&G management on the quarter ahead could be crucial. In particular, how P&G sees matching challenging comparables beginning next quarter, the promotional stance and capital allocation plans with more cash on hand, according to Seeking Alpha’s Catalyst Watch.
From a technical perspective, it’s already been a tough year from P&G.
After a December rally pushed into the new year, the stock failed a test of its 50- and 100-day simple moving averages, falling back below those levels on Jan.8. On the same day, the 100-day SMA crossed below the 50-day in a bearish signal.
Shares are closing in on oversold territory, with a relative strength index of 37.31.
The Consumer Staples (NYSEARCA:XLP) sector has been struggling among the classic defensive plays.
XLP is down 2.6% this year and 3% in the last month.
“Household and personal care products industries are the most attractive in the sector,” Seeking Alpha contributor Fred Piard wrote. “The tobacco industry stands out in valuation, but it is very bad in quality. However, statistics must be taken with caution: there are only 5 tobacco companies in my calculation universe.”
This year, XLP has fallen below its 50-day and 100-day SMAs and is only 4.5% above the 200-day SMA.
Procter & Gamble is the biggest holding in XLP at 16.71%. That’s followed by Coca-Cola (NYSE:KO), PepsiCo (NASDAQ:PEP), Walmart (NYSE:WMT), Modelez (NASDAQ:MDLZ) and Costco (NASDAQ:COST).
P&G’s “return on capital is at a remarkable 83%,” Regarded Solutions writes. “Yes, the pandemic actually helped, but still, the company has been and from my point of view, will continue to be solid in any economic environment.”
Overall, analysts are getting more bullish on classic defensive sectors.