To The Moon

$Procter & Gamble(PG)$ is scheduled to release its fiscal Q2 quarterly results before the market open on 22 Jan.

UBS said on Friday in a note that the earnings might miss consensus estimates. This could be attributed to the continued challenges from geopolitical and economic conditions, particularly in the Middle East and China, affecting overall sales growth. On Top of that PG was hit by ransomware attack in late November.

The fiscal Q2 earnings per share is projected to be at 1.86 which is on the lower end of analyst estimates of $1.88 and $1.86 in surveys undertaken by Visible Alpha and FactSet, respectively.

Procter & Gamble (PG) Last Earnings With Significant Challenges in Greater Chain and Middle East

Since PG last earnings call on 18 Oct 2024, the share price have a negative 5.92% change, this would sit quite well with the neutral earnings call sentiment in October.

The earnings call highlighted strong performance and market share growth, particularly in North America and Europe, but was tempered by significant challenges in Greater China and the Middle East. The company's stable earnings and cash returns were positives, but the ongoing headwinds in key markets, particularly with SK-II in Beauty, presented significant challenges.

Greater China organic sales declined 15% due to weak market conditions and brand-specific headwinds with SK-II. Continued challenges from geopolitical and economic conditions, particularly in the Middle East and China, affecting overall sales growth.

SK-II sales were down significantly, impacting the overall performance of the Beauty segment, particularly in China.

Procter & Gamble (PG) Guidance Optimistic

During the earnings call for Procter & Gamble's Q1 2025, CFO Andre Schulten provided guidance for the fiscal year. The company maintained its guidance ranges, expecting organic sales growth between 3% to 5%, with market growth in local currency sales projected at 3% to 4%.

Core EPS guidance remains at a growth of 5% to 7%, translating to $6.91 to $7.05 per share. Schulten noted a $200 million after-tax headwind from commodity costs, equating to $0.08 per share, while foreign exchange impacts are expected to be neutral.

The company plans for adjusted free cash flow productivity of 90%, with $10 billion in dividends and $6 to $7 billion in share repurchases anticipated. Despite challenges in regions like China and the Middle East, P&G expects to leverage strong innovation and market share gains in North America and Europe to meet its fiscal targets.

This could be due to the strong organic sales growth in North America, where organic sales in North America grew 4% driven by 4 points of volume growth, with consistent growth over the last five quarters. North America delivered broad-based market share growth with 8 of 10 categories holding or growing volume share and 9 of 10 categories holding or growing value share.

Core earnings per share were $1.93, up 5% versus prior year, and the company returned nearly $4.4 billion of cash to shareholders.

Procter & Gamble (PG) Price Target

Based on 18 Wall Street analysts offering 12 month price targets for Procter & Gamble in the last 3 months. The average price target is $180.50 with a high forecast of $209.00 and a low forecast of $155.00. The average price target represents a 12.02% change from the last price of $161.13.

I would think the current price might be a good time to look at PG, though there are headwinds challenges by PG, but they are working on a few programs to overcome them, the demand for their products would pick up once we see consumer having more disposable income.

Technical Analysis - Multi-timeframe

PG have been trading on the downward trend, and only recently sideway trend is spotted. But that does not improve the weakness in its share prices since the last earnings.

We might see a bullish MACD crossover formed, and this could also help us to get a golden cross if short-term MA cross from below the long-term MA, then we could see a nice bullish reversal.

PG has to show a much better guidance for 2025 as the overall sales growth could be affected by the weaker China economy, so MTF is showing downward trend mostly, which might be a signal of further downside.

I would hold onto getting this stock because it still looks weaker, I will see how investors sentiment is like when trading opens today (21 Jan).

Summary

PG sales revenue from China might worsen as the Chinese economy would affect the consumers spending, what we might see improving is from other countries and regions for its SK-II products.

This might help to improve the overall performance of the Beauty segment, but we will have to see how the fiscal Q2 earnings result show up.

Appreciate if you could share your thoughts in the comment section whether you think PG would improve their sales revenue in the upcoming earnings due to better sales in the beauty segment because of the holidays.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.