October 1, 2023

Shares of

Procter & Gamble

were rising Friday after the consumer-goods company beat earnings and revenue expectations following more price increases.

Procter & Gamble

(ticker: PG) reported fiscal fourth-quarter earnings of $1.37 a share on revenue of $20.6 billon. Analysts surveyed by FactSet were expecting the maker of Tide laundry detergent to post earnings of $1.32 a share on revenue of $20 billion.

Concerns about a weakening consumer remain top of mind for investors. Stubbornly high inflation and rising interest rates have hit many shoppers’ pockets, causing them to look for bargains.

Procter & Gamble said that it raised prices by 7% during the quarter, which follows a 10% increase in the third quarter. The price increases led to sales volumes declines across all division during the quarter, led by decreases in health care and fabric and home care.

But Procter & Gamble has a wide variety of products—and Raymond James analyst Olivia Tong believes it will benefit the company in a time when customers are possibly looking to trade down.

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“We think PG will continue to face the most pressure in its categories with higher private label exposure like tissue/towel, but given the breadth of price points across PG’s portfolio today vs. prior downturns, we expect the company to catch trade down from its own brands just as the Gain brand is doing for Tide currently,” Tong wrote in a research note earlier this week before the earnings were released. She rates Procter & Gamble at Outperform with a $175 price target.

There’s also bright spots in data that could be a good sign for the consumer staples stock moving forward. The U.S. economy grew at a 2.4% annual rate in the second quarter, which was more than economists expected and partially was driven by consumer spending.

However, personal consumption expenditures increased by 1.6% in the period, which was a decline from the first quarter’s 4.2% gain. Shoppers spent more on services than goods in the quarter.

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For fiscal 2024, Procter & Gamble said it expects sales growth of between 3% and 4% from $82 billion in 2023. The company also anticipates fiscal-year earnings of between $6.25 and $6.43 a share, up from fiscal 2023’s profit of $5.90.

“As we look forward to fiscal 2024, we expect to deliver strong organic sales growth, EPS growth and free cash flow productivity—each in-line with our long-term growth algorithm, despite continued macroeconomic and geopolitical challenges,” Chief Executive Jon Moeller said in the earnings release.

Shares of Procter & Gamble were rising1.6% in premarket trading Friday to $154.53. Coming into the session, the stock has risen 0.4% this year.

Write to Angela Palumbo at [email protected]

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