If the impending staple food business earnings season for Procter & Gamble (PG) looks set on earnings day, many shares in the sector could be one leg higher.
Shares of the Tide Detergent and Gillette Shaving Care owner rose nearly 2% on Wednesday after a further blowout quarter and optimistic prospects, both driven by changing consumer habits during the COVID-19 pandemic. The company has seen organic sales in all business segments, with a 12% increase in the grooming industry as households clean more dishes and surface as they are home 24/7.
“We are building on a strong momentum that we have built up over the past number of years. And it continues in the COVID environment, ”Jon Moeller, vice president and chief financial officer of P&G, told Yahoo Finance.
Here’s how P&G performed compared to Wall Street estimates for its second fiscal quarter.
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Net sales: $ 19.7 billion versus estimates for $ 19.23 billion
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Core diluted EPS: $ 1.64 versus estimates for $ 1.51 per share
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FY21 Outlook: Organic sales growth of + 5% to + 6% and core profit growth of + 8% to + 10%
In addition, P&G increased its sales and profit outlook for the full financial year, saying it would repurchase $ 10 billion in inventory. Previously, the company had planned to buy back between $ 7 and $ 9 billion in the financial year, but Moeller says P&G has gained more confidence in the direction of the business.
The main question that Wall Street now has about consumer products is how, as the industry jargon puts it, it will ‘have to compose’ in the second half of 2021. In other words, consumer products may still show strong sales and profit compared to a year ago at the height of the pandemic, as people worldwide return to normal after vaccination. The return to normal may mean fewer purchases of a range of frozen food to detergent consumables and a related growth retardation in consumables.
Consumer-level stock prices reflect the anxiety, as Yahoo Finance reported.
P & G’s Moeller is well aware of the concerns on the streets, but remains confident that the business is in a new stable condition.
“We look forward to meeting what we believe will be an ever-changing need for consumers for products that help them with health hygiene and a clean home. “There are habits that are formed during this unfortunately long COVID period that we believe will continue to some extent after COVID,” said Moeller.
P&G is the first in space to punch holes in Wall Street’s thought bubble. Others may follow soon.
Brian Sozzi is a general editor and anchor by Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and so on LinkedIn. Julia La Roche is a correspondent for Yahoo Finance. Follow her further Twitter.
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