After the better-than-expected earnings report of Procter & Gamble Company for the fourth fiscal year of 2016, the stock moved on a positive trend. During the previous session, the shares of the stock closed at $86.55, after opening at $86.66.
Procter & Gamble mentioned in its fourth quarter report that it was a period of progress driving P&G’s results to a balance of strong top-line growth, bottom-line growth and cash generation. The American multinational consumer goods company disclosed a decline of 3 percent to $16 billion in its net sales, however, it managed to beat the estimated $15.8 by the analysts.
As seen in the image below, the stock moved upward from its first quarter earnings report up to the last one. Although there were moments of downtrend, P&G managed to stay on the green line. In the third quarter, the prices were pushed into the outer band which meant that there was a lack of power in the trend. However, there was a significant price increase in the beginning of the fourth quarter after the price went beyond the lower barrier.
Chairman, President and Chief Executive Officer David Taylor noted that positive changes in the company’s organic volume and sales in all its segments after the increase of investments in innovation and advertising. As the consumer company pays attention on quality and profitability, what can we expect in 2017?
P&G in 2017
Speaking at the release of the fourth quarter report, Mr. Taylor said that they’re committed to continue productivity improvement and cost savings that provide the fuel for innovation and investments needed to accelerate and sustain faster top-line growth.
The company expects the fiscal 2017 to mark another significant step toward their goal of balanced growth and value creation and total shareholder return in the top third of their competitive peer group.
Looking through the performance of the company’s respective divisions, the health care segment had the highest improvement with 8 percent sale increased due to more innovative marketing strategy and increased pricing. It was followed by a 7 percent increase of the grooming segment .The rest of the segments, which includes beauty, fabric & home and baby, feminine & family care, had one percent increase respectively.
Outlook for P&G
In-line with this, the FSM News group of analysts agreed that the company will experience a headwind in 2017 as the U.S. currency would probably make an adjustment in case the Fed will finally implement a rate hike. The company needs to come up with a better plan to manage volatility from domestic to global chains in times of challenging market downturns coming next year due to post-Brexit.
Cost fluctuations are also at the doors of the company as the value of energy and commodities stocks remain volatile. P&G is expected to face share repurchases and dividend payments, thus, the stock should consider growth stimulus to push the income and cash inflow higher. One of the soundest ways to address this would be a strategical optimization of the company’s portfolio through investments and partnerships.
Just like other companies, P&G plays head to head with Uniliver PLC, Johnson & Johnson and Colgate Palmolive. Although the company still remains to be the top of the grooming segment, P&G needs to reconsider its pricing and product innovation to boost better revenue.
FSM News forecasts that the revenue of the company will gain around 2 percent and the organic sales to stay around 2 percent to 3 percent. It’s diluted net EPS will be between $3 to $4 as the Core EPS would stand at $4 as the company would probably spend more on marketing investments.
As of 16:49 UTC, the stock opened at $87.03 with an intraday high of 87.37 and intraday low of 87.03. It closed at 87.24 with resistance at 87.37 and support at 87.07. As seen in the graph, the price broke the lower barrier (1), thus a significant price movement could happen. It surpassed the moving average at 87.04 (2), this was an indication that the trend has been already on its end and would settle to its current standing. Looking in depth, there’s a possible reversal (3) after the stock broke the lower barrier. Also, there’s a reasonable chance that a tight trading range is coming for the stock (4).