On January 19, 2021 Procter & Gamble reported 2nd quarter 2022 earnings results (see press release here).
For the quarter, the company reported 6% top line revenue growth to $20.9 Billion versus last year. Diluted earnings per share (EPS) in Q2 was $1.66 vs. a $1.65 consensus estimate and up from $1.64 a year ago (based on ‘core’ reported eps).
Even as revenues grew, gross profits fell 2% due to increased cost pressures. Gross profit margins declined a full 4% to 49.1% from 53.1% a year earlier.
P&G’s Health Care segment continued to lead with net sales up 8%, driven by a combination of volume growth, price increases, and a mix shift.
Despite solid volume and pricing growth in the company’s flagship Fabric & Home Care segment, net earnings fell 9% versus the year ago quarter. The Baby, Feminine & Family Care segment saw a double-digit net earnings decline of 12%.
For the full fiscal year, the company expects a $2.8 billion ($1.10 per share) after-tax headwind due to inflated costs. Thanks to prescient price increases last September, overall net pricing increased 3% in Q2 and helped somewhat offset higher costs. Looking at other costs, SG&A spending remained relatively level.
P&G revised its fiscal 2022 ‘all-in’ sales growth forecast from a range of 2% to 4% to a higher low-end range of 3% to 4%.
The company expects 2022 bottom line ‘core’ EPS to grow between 3%-6% vs. 2021’s core $5.66 per share.
These estimates would put P&G’s full year ‘core’ earnings per share in a range of $5.83 to $5.99 for fiscal 2022. Applying this guidance to P&G’s January 19th, 2022 closing price ($162.00) places their forward price/earnings valuations between 27.0 and 27.8 times earnings.
P&G beat consensus earnings forecasts for the last three consecutive quarters, their guidance remains strong, and expectations remain high. Still, P&G’s price-earnings valuation continues to trend near the high-end of its range over the past decade (14.6x in 2011 and 25.7x in 2019).
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