Consumer goods giant Procter & Gamble (PG) offers a vast portfolio of branded home and personal care products. On April 20, the corporation will release its financial results for the fiscal third quarter of 2022.
PG has done a good job of keeping its shareholders satisfied. The stock has increased by 4% over the last month and 13% over the past six months.
With earnings season in full gear, investors will be watching the company’s performance in the upcoming quarter with bated breath.
Macro-Economic Conditions Remain Favorable
The current macroeconomic environment favors defensive stocks, including healthcare, utilities, and consumer staples, like Procter & Gamble.
As inflation reaches all-time highs and interest rates rise, consumers may turn away from non-essential products. However, Procter & Gamble may have some leeway to raise prices and pass on the increased costs to customers.
With prices climbing, defensive stocks may also be “inflationary hedges to some extent,” according to Mona Mahajan, senior investment strategist at Edward Jones.
Mahajan adds, “When you think about where there is a bit more pricing power, consumers will have to purchase their staples, their healthcare, probably pay their utility bills, regardless of the price increases.”
Q3 Expectations
According to analysts, Procter & Gamble is expected to report adjusted earnings of $1.30 per share. This represents a year-over-year increase of 3.2%.
Procter & Gamble has beaten profit estimates in the preceding eight quarters and looks likely to do so again in Q3.
Website Trends Are Encouraging
We also used TipRanks’ new online tool to track user visits to the Procter & Gamble website to gain a better idea of the company’s performance ahead of the fiscal Q3 print. Notably, the tool revealed positive patterns on the website, which may be reassuring to investors.
We found that forecast visits to Procter & Gamble’s website increased in Q3. In particular, the total projected worldwide visits to the PG website increased by 44.7% from the second quarter of 2022.
Differing Views
Olivia Tong, a Raymond James analyst, is optimistic about Procter & Gamble’s future prospects. She feels that P&G’s strategy and modifications to the company’s portfolio have paid off in recent years, resulting in improved top-and bottom-line growth.
Tong is also impressed with the company’s ability to protect itself from increased volatility in the market while focusing on innovation that will help PG to retain its recent momentum.
The analyst initiated coverage of Procter & Gamble with a Buy rating and a price target of $175, reflecting 11.4% upside potential from current levels.
Not all analysts, though, are bullish on the stock.
JPMorgan analyst Andrea Teixeira recently downgraded the stock to a Hold from a Buy and decreased the price target to $165 from $181. This implies 5.1% upside potential from current levels.
Teixeira feels that “current cost and currency headwinds” will have an impact on P&G’s upcoming results to some extent.
Wall Street’s Take
That said, Wall Street is cautiously optimistic about Procter & Gamble stock, with a Moderate Buy consensus rating based on seven Buys and five Holds. As for price targets, the average PG price target of $167.55 implies almost 7% upside potential from current levels.
Bottom Line
Procter & Gamble is a company with a strong competitive advantage. It has the ability to announce outstanding results for the fiscal third quarter, which should boost its stock price. On the other hand, cost pressures could be a thorn in its side in the upcoming quarter.
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