Procter & Gamble Stands By Forecasts for Current Quarter
Procter & Gamble said that it still expected to meet its financial forecasts for the current quarter, easing worries that sales might slow down.
The company, whose products include Gillette razors, Pampers diapers and Tide laundry detergent, said it should earn 64 cents to 66 cents a share in its fourth quarter, which ends in late June. Analysts on average expect profit of 66 cents a share, according to Reuters Estimates.
While the company's forecast still suggests that its profit could miss Wall Street's expectations, investors were pleased with the affirmation, sending shares of P&G up slightly. In early afternoon trading Tuesday, P&G was the only Dow Jones Industrial Average component stock that stood in positive territory.
"We view the reiteration of both sales and profit outlooks as a positive," Morgan Stanley analyst Bill Pecoriello wrote in a note to clients.
Pecoriello, who rates the stock "overweight," said the reiteration should help abate investor concern about a potential slowdown in sales because of tough comparisons, increased spending by competitors and soft demand for P&G products in U.S. stores tracked by research firms early in the quarter.
Cincinnati-based P&G said it expected sales to rise 6% to 7% in the quarter. It still expects organic sales, which exclude mergers and the impact of foreign exchange, to rise 5% to 6%.
"Given tough (comparisons), this is as much as the market hoped for," Bank of America equity analyst April Scee wrote in a research note.
Scee, who rates P&G shares at "buy," said the company's affirmed outlook increased her confidence in her earnings estimate of 66 cents a share and organic sales growth of 7%.
In early May, P&G said it would soon end its long-time practice of giving such midquarter updates after many long-term shareholders said the announcements created greater short-term stock volatility and did not have strategic value.
The change will take effect in the second quarter of fiscal 2008.
Most major U.S. consumer products companies that present financial forecasts typically only give updates when they report results, unless a situation calls for a major revision.
The company plans to release full quarterly results on Aug. 3.