Factors to Note Ahead of Procter & Gamble's (PG) Q2 Earnings

The Procter & Gamble Company PG is set to report second-quarter fiscal 2022 results on Jan 19, before the opening bell. The Zacks Consensus Estimate for the company’s fiscal second-quarter earnings is pegged at $1.65 per share, indicating 0.6% growth from the year-ago quarter’s reported figure. The consensus mark has moved up by a penny in the past 30 days.

For fiscal second-quarter revenues, the consensus mark is pegged at $20.4 billion, suggesting 3.1% growth from the prior-year quarter’s reported figure.

In the last reported quarter, the company delivered an earnings surprise of 1.3%. Its bottom line beat estimates by 5.3%, on average, over the trailing four quarters.

Procter & Gamble Company The Price and EPS Surprise

Procter & Gamble Company The Price and EPS Surprise

Procter & Gamble Company The price-eps-surprise | Procter & Gamble Company The Quote

Key Factors to Note

Procter & Gamble’s second-quarter fiscal 2022 results are expected to reflect the benefits of continued strength in brands and appropriate strategies, which have been aiding organic sales growth. The company’s products play a key role in meeting the daily health, hygiene and cleaning needs of consumers around the world. Its business segments are expected to have witnessed organic sales growth, driven by robust volume, pricing and mix.

The company has been resilient in a tough environment, given its focus on productivity and cost-saving plans, which have been aiding its margins. PG has been witnessing cost savings and efficiency improvements across all facets of its business, driven by the productivity program. Its continued business investments alongside efforts to offset macro cost headwinds, and balanced top and bottom-line growth underscore its productivity efforts. Gains from productivity savings and pricing are expected to have aided margins and the bottom line in the fiscal second quarter.

However, headwinds related to commodity cost inflation and higher freight costs along with increased reinvestment costs and unfavorable mix cannot be ignored. These have been weighing on PG’s gross margin despite gains from productivity savings.

On the last reported quarter’s earnings call, Procter & Gamble predicted higher commodity and freight costs to persist throughout fiscal 2022. This indicated continued headwinds for the fiscal second quarter, which are expected to have weighed on margins and earnings.

The company noted that input costs rose sharply, particularly for materials like resins, chemicals and other ingredients, which are expected to have increased in the fiscal second quarter. Freight costs have also continued to increase. This is anticipated to have led to continued pressures on the fiscal second-quarter performance.

Zacks Model

Our proven model does not conclusively predict an earnings beat for Procter & Gamble this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. However, this is not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Procter & Gamble has a Zacks Rank #4 and an Earnings ESP of -3.72%.

Stocks With Favorable Combination

Here are some companies you may want to consider, as our model shows that these have the right combination of elements to deliver an earnings beat.

Archer Daniels Midland ADM currently has an Earnings ESP of +3.20% and a Zacks Rank of 3. The company is expected to register top and bottom-line growth when it reports the fourth-quarter 2021 numbers. The Zacks Consensus Estimate for ADM’s quarterly revenues is pegged at $20.37 billion, which suggests growth of 13.3% from the prior-year quarter’s reported figure.

You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Archer Daniel’s quarterly earnings has moved up 1.6% in the past seven days to $1.25 per share, suggesting 3.3% growth from the year-ago reported number. ADM has delivered an earnings beat of 23.4%, on average, in the trailing four quarters.

Mondelez International MDLZ currently has an Earnings ESP of +3.99% and a Zacks Rank #3. MDLZ is likely to register top and bottom-line growth when it reports the fourth-quarter 2021 numbers. The Zacks Consensus Estimate for its quarterly revenues is pegged at $7.6 billion, which suggests growth of 3.5% from the figure reported in the prior-year quarter.

The Zacks Consensus Estimate for Mondelez International’s quarterly earnings has been unchanged in the past 30 days at 72 cents per share, suggesting growth of 7.5% from the year-ago quarter’s reported number. MDLZ has delivered an earnings beat of 3.3%, on average, in the trailing four quarters.

AnheuserBusch InBev BUD, alias AB InBev, currently has an Earnings ESP of +6.38% and a Zacks Rank #3. BUD is anticipated to register top-line growth when it reports the fourth-quarter 2021 results. The Zacks Consensus Estimate for AB InBev’s quarterly revenues is pegged at $13.3 billion, indicating an improvement of 4% from the figure reported in the prior-year quarter.

The Zacks Consensus Estimate for AB InBev’s bottom line has moved up by a penny in the past seven days to 71 cents per share. However, the consensus estimate for BUD suggests growth of 34.3.2% from the year-ago quarter’s reported figure.

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Procter & Gamble Company The (PG) : Free Stock Analysis Report

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