PG Stock: What to Watch Ahead of Q2 Earnings

PG Stock

PG Stock (NYSE:PG)

The results for the second quarter of the fiscal year 2023 will be reported by The Procter & Gamble Company (NYSE:PG) on January 19, before the market opens. In the coming quarter, it is anticipated that the company will post lower revenue and profitability than in the previous quarter. PG stock has fallen more than 5% over one year.

Earnings projections for the company’s fiscal second quarter are currently pegged at $1.57 per share, which represents a 5.4% drop from the figure that was actually recorded in the previous quarter. Over the past 30 days, the amount that is generally agreed upon has stayed the same. Revenues are expected to come in at $20.57 billion for the second quarter of the current fiscal year, which is 1.8% lower than the reported amount for the same quarter in the prior fiscal year.

We forecast that the company’s overall revenues for the fiscal second quarter will decrease by 4.6% year on year to $20,065.3 million, with the bottom line decreasing by 5.4% to $1.57 per share.

In the most recent quarter, the company managed to wow investors by a 1.3% margin. It outperformed expectations in terms of its bottom line in each of the prior four quarters by an average of 1.05%.

Important Considerations

The performance of Procter & Gamble has suffered as a result of rising expenses associated with freight, commodities, and raw materials, which have all combined. Because of the continuous effects of commodity and raw material cost inflation, higher freight costs, negative product mix, and other impacts, and increased product and packaging investments, it is anticipated that the company’s gross margin was under pressure during the fiscal second quarter. It is anticipated that currency market fluctuations will negatively impact the growth of total sales and earnings per share in the forthcoming quarter.

During the most recent earnings call, Procter & Gamble made the forecast that increasing commodity and freight prices would persist into the company’s fiscal year 2023. According to our projections, the gross profit for the second quarter of the fiscal year will be lower than the same period last year by 4.7%, and the gross margin will be lower by 30 basis points. We predict that our operating income will decrease by 6.1% during the second quarter of the fiscal year, which will also result in a contraction of our operating margin by 50 basis points. Because of this, the bottom line may take a hit in the future quarter.

It is anticipated that adverse effects caused by currency fluctuations will hurt the performance of the company and PG stock in the following quarter. It is anticipated that rising input costs will negatively impact the performance of the company during the fiscal second quarter. In addition, adverse effects of currency exchange rates are anticipated to have a 6% impact during the fiscal second quarter.

On the other hand, Procter & Gamble has reaped the benefits of greater efficiency and consistent consumer demand for cleaning goods. It is anticipated that the benefits of continuing brand strength and appropriate tactics, which have assisted in organic sales growth, will be reflected in the company’s results for the second quarter of the fiscal year 2023. It’s important to note that the average projection for growth in organic sales is 4.9%.

The company has made increasing productivity and decreasing costs a priority, which has boosted the margins of the company’s products. As a direct result of PG’s participation in the productivity program, the company has reduced costs and increased operational efficacy across the board. Its productivity efforts are highlighted by its continued business investments, efforts to overcome macroeconomic cost challenges, and balanced growth in the income statement’s top and bottom lines. In the second quarter of the fiscal year, it is anticipated that productivity improvements and pricing will increase margins and the bottom line.

In addition, the company has likely experienced SG&A expense leverage due to savings from overhead and marketing expenses and cost leverage gains from higher sales and real estate.

Featured Image: Freepik @ gyn9039

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About the author: Stephanie Bedard-Chateauneuf has over six years of experience writing financial content for various websites. Over the years, Stephanie has covered various industries, with a primary focus on tech stocks, consumer stocks, health stocks, and personal finance. This stock lover likes to invest for the long-term. Stephanie has an MBA in finance.