Procter & Gamble Earnings Preview

Procter & Gamble (PG: 57.18 +0.49%) is scheduled to report their fiscal first quarter 2010 results before the market opens on Thursday, October 29. Based on our analysis, we at EarningsPreviews.com are expecting P&G to report inline quarterly results that meet Wall Street’s consensus expectations.

Analyst Expectations

We are forecasting revenues of $19.99 billion and EPS of $.99. This would represent a 9% decline in revenues from last year’s $22.03 billion in the same period. The current analyst consensus estimates calls for revenues of $19.83 billion and EPS of $.99.

While the global economic headwinds may be abating, Procter & Gamble is still struggling to recover from market share losses suffered over the last few quarters. P&G’s portfolio of premium products was poorly positioned during the recent recessionary environment as consumers switched to cheaper, private label products.

Fortunately, P&G’s comps get much easier beginning next quarter. Improving consumer confidence should also help P&G brands recover market share. Also, new CEO Bob McDonald seems to be focusing on restoring organic growth which could provide investors with the catalyst they have been looking for in recent quarters.

Share Performance

Since the beginning of the year, Procter & Gamble’s shares have fallen nearly 5%. In comparison, the Dow Jones industrial average has gained nearly 13% in 2009.

Valuation

Shares are now trading at 14x consensus 2011 EPS estimates. This is a slight premium to the relative valuations of their peer group. With an improving economic environment, we anticipate slow but steady growth in P&G’s stock price.

Recommendation: Buy with a $60 price target

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