Why Procter & Gamble Co Stock Surged Today – The Motley Fool

What happened

Actions of Procter & Gamble Co (NYSE: PG) exploded today after the consumer products company released a surprisingly strong first quarter earnings report. P & G exceeded expectations, both in terms of results and results, generating its largest gain in market share in a day since 2008. At 1:16 pm EDT, the stock was up 7, 8%.

Source of image: Procter & Gamble.

So what

The parent company of brands such as Tide detergent and Gillette razors announced organic growth of 4%, not affected by acquisitions or divestitures, its fastest quarterly growth of the past five years. The volume of organic products was higher in all five sectors, while sales of organic products increased in all sectors, with the exception of baby care, women and families, where it decreased by 1% . Growth in its beauty business was particularly strong with organic sales up 7%, driven by super-premium brands such as SK-II and Olay Skin Care, both of which posted double-digit growth. figures, helped by the Chinese market.

Overall sales are essentially stable, up 0.2% to $ 16.69 billion, while the company continues to move its portfolio, but exceeded analysts' expectations, to $ 16.5 billion . In the end, adjusted earnings per share (EPS) increased 3% thanks to a lower tax rate of $ 1.12, ahead of estimates at $ 1.09. Net income adjusted for currency effects was up 11% to $ 1.21.

CEO David Taylor said, "Our focus on superiority, productivity and improvement of P & G's organization and culture leads to better results."

Now what

In response to the strength of the quarter, P & G said it would increase the prices of many products as gross margin actually decreased in the quarter, in part due to higher commodity costs. Chief Financial Officer Jon Moeller said the company would raise prices in the US for home care, oral care and personal care products.

Looking ahead, management has maintained its guidance for the full year, calling for organic growth in sales of 2% to 3% and adjusted, or "at the heart" as the company calls it, EPS growth of 3% to 8% from $ 4.22 last year.

After years of almost steady growth, investors welcome the celebration of sales growth, but forecasts indicate that this rise may not last.

Jeremy Bowman has no position in any of the actions mentioned. The Motley Fool has no position in the mentioned actions. Motley Fool has a disclosure policy.