The company’s current much-touted pricing power is evanescent and will diminish as competition increases and the staples sector continues to experience profound change
Procter & Gamble Co. (NYSE:PG) posted good results for
its latest quarter, exceeding analyst expectations for some measures.
Earnings per share were $1.21, beating the consensus of
$1.21. At $17.44 billion, net sales remained unchanged from the prior year. The
company’s sales were not uniform across all its segments. While the beauty
products logged an 8% increase in organic sales, other areas, such as diapers
and its Gillette shaving products division, continue to be flat. The steady
erosion in Gillette’s share of the razor market has been pronounced. In many
ways, it could be construed as a bellwether for the company in particular and
the entire consumer staples sector in general.
After several quarters of anemic growth, investors were
understandably ebullient that the company had first and second back-to-back
quarters of 4% organic sales growth. However, it is paramount to note that the
price increases have been announced but have not yet been fully implemented.
How consumers will react remains to be seen, prompting the question: Should the
stock command a premium multiple?
Comments
Post a Comment