Procter & Gamble First Quarter Earnings Preview

By Investopedia Staff | October 22, 2012 AAA

When Procter & Gamble (NYSE:PG) releases its first quarter earnings on Thursday, October 25, 2012, analysts are expecting a 6.8% drop in earnings from a year ago. The consensus estimate is 96 cents per share, down from earnings of $1.03 per share a year ago.

Earnings are perhaps the single most studied number in a company's financial statements because they show a company's profitability. SEE: Can Earnings Guidance Accurately Predict The Future?

What to Expect: The consensus estimate hasn't changed in the last month, but it has dropped from $1.03 three months ago. Analysts are expecting earnings of $3.91 per share for the fiscal year.

Procter & Gamble is expected to report revenue of $20.76 billion for the quarter, down by 5.3% from last year's figure of $21.92 billion. For the fiscal year, expected revenue is $84.27 billion.

Company Performance: Revenue has risen by an average 2.3% in the last four quarters. The most significant increase took place in the first quarter of the last fiscal year, when it rose 8.9% from the year-earlier quarter.

PG has a P/E ratio of 18.7, high compared to the industry average of 17.13. Usually, if a stock has a high P/E ratio, it indicates that the market expects the company to grow earnings quickly in the future. Perhaps one of the most widely-used stock analysis tools is the price-to-earnings ratio, or P/E. A high P/E ratio indicates a stock that is expensive, while a low P/E ratio indicates a stock that is cheap. SEE: How To Find P/E And PEG Ratios

Over the past quarter, the stock price has increased from $64.02 on July 24, 2012 to $68.57. Procter & Gamble's best recent streak was when its price gained $2.86 per share between August 10, 2012 and October 5, 2012.

The Competition: Procter & Gamble sells and markets consumer products such as pharmaceuticals, cleaning supplies, personal care, and pet supplies in more than 180 countries. The company's closest competitor in the personal and household prods. industry, Colgate-Palmolive (CL), will report earnings on October 25, 2012. Analysts are expecting earnings of $1.38 per share for Colgate-Palmolive, up 5.3% from last year's earnings of $1.31 per share. Analysts are more optimistic about Procter & Gamble than about Colgate-Palmolive. Only seven out of 22 analysts rate the latter a buy compared to 10 of 23 for the former.

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