Why Consumer Products Giant Procter & Gamble's Shares Are Surging Today

Procter & Gamble Co PG reported first-quarter FY24 sales growth of 6.1% year-over-year to $21.87 billion, beating the consensus of $21.67 billion.

Organic sales increased 7%, driven by a 7% increase from higher pricing and a 1% increase due to favorable product mix, partially offset by a 1% decrease in shipment volume.

Adjusted EPS of $1.83 (+17% Y/Y) beat the consensus of $1.71.

Segment Sales Growth YoY: Sales in the Beauty segment rose 3%, the Grooming segment gained 6%, Health Care increased 11%, Fabric & Home Care rose 8%, and Baby, Feminine & Family Care grew 5%.

Gross profit increased 16.4% Y/Y to $11.37 billion, and the gross margin increased by 460 basis points to 52%.

Operating margin expanded by 240 basis points to 26.4%, while operating income for the quarter rose 16.8% to $5.77 billion.

P&G held $9.73 billion in cash and equivalents as of September 30, 2023. Operating cash flow for the quarter was $4.9 billion.

Also Read: Procter & Gamble Likely To Report Higher Q1 Earnings; Here's A Look At Recent Price Target Changes By The Most Accurate Analysts

The company returned $3.8 billion of cash to shareowners via ~$2.3 billion of dividend payments and $1.5 billion of common stock repurchases.

FY24 Outlook: P&G now sees all-in sales growth of 2%-4% (prior expectation 3%-4%); maintains FY24 organic sales growth expectation of 4%-5%. P&G reaffirms its EPS outlook of $6.25-$6.43.

P&Gs expects tailwinds of ~$800 million after tax due to favorable commodity costs. 

P&G now expects an effective tax rate of ~21%. Capital spending is estimated to be ~4.5% (prior view 5%) of FY24 net sales.

P&G expects to pay over $9 billion in dividends and repurchase $5 billion-$6 billion of common shares in fiscal 2024.

Price Action: PG shares are trading higher by 1.98% at $149.16 premarket on Wednesday.