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Procter & Gamble Update - Strong Earnings Announcement

Good news from Procter & Gamble today.  The company announced earnings of $2.6 billion, or 91 cents per share, up from 69 cents per share a year earlier.  Earnings were above analyst expectations due to cost savings and wider profit margins.  And while overall sales declined in the third quarter, the company said it expects next quarter’s earnings to grow.  The stock was up 2.91% for the day.

Procter & Gamble has underperformed over the last year declining 7.5% versus a gain of 10.0% for the overall market as measured by the S&P 500.  This relative underperformance makes us like the company even more because we believe the company has sold off more than it should have.  The company has been hampered by foreign currency headwinds, and they’re also in the middle of a multi-year restructuring whereby they’re shedding some sub-optimal brands.  We believe the company has nearly 30% upside.  We also are attracted to the 3.44% dividend yield which is near the highest level it’s been in about 25 years.

You can view our previous P&G updates here, and you can view our full research report and thesis here.

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