Reports Q2 2022 results on Wednesday, January 19, before market opens
Expected Revenue: $20.34 Billion
EPS forecast: $1.66
When Procter & Gamble (NYSE:) reports its latest earnings tomorrow morning, investors will focus on the consumer products giant's ability to keep its global markets well supplied as the Omicron variant of the COVID virus disrupts the the supply chain worsens.
From furniture makers to grocers, the world's largest companies are using their deep pockets, vast global operations and dominant market share to isolate themselves from the global supply chain collapse.
However, the impact of the ongoing barriers in the supply chain cannot be completely avoided. P&G expects $2.3 billion in after-tax costs this fiscal year—up from its previous forecast of $1.9 billion—as a result of cost increases due to high raw material and freight prices.
"We have experienced the full impact of rising raw material and transportation costs this quarter," Chief Financial Officer André Schulten said during a conference call in October.
However, P&G is in a good position to isolate itself from these bottlenecks due to its ability to raise prices and spend on supply chain solutions. Cincinnati-based P&G, which makes Tide laundry detergent and Crest toothpaste in addition to many other recognizable supermarket products, has started to charge more for razors and certain beauty and oral care products. These price increases come on top of previous moves to charge more for a range of household necessities, from diapers to toilet paper. That is perhaps the main reason why investors have ignored the offer. headwinds when it comes to Procter & Gamble. The stock hit an all-time high early this month, after gaining around 11% in the past three months.
The stock closed Friday at $159.81; US markets were closed on Monday for a holiday.
Procter & Gamble Weekly Overview
P&G's brand strength, global reach and corporate restructuring in recent years have made the company a fast-growing consumer staple company with many years of solid growth ahead of it.
We believe the current inflationary environment will help fuel fuel further, as consumers are willing to pay for what they want amid increased demand for household necessities during the pandemic. Barclays analyst Lauren Lieberman maintained a "buy" recommendation for Procter & Gamble on Jan. 13 and set a price target of $178.00.
PG Fair value
Source: InvestingPro
InvestingPro's fair value model provides a more robust picture and assigns a fair value of $173.41 to the stocks with a wider potential diversification.
Analysts are generally optimistic about P&G's performance outlook.
Analyst Consensus Estimates Polled by Investing.com
Chart: Investing.com
Of the 23 analysts surveyed by Investing.com, 12 give their stocks an "outperform" rating.
That said, there's still little chance that P&G will be able to make a major profit for the previous quarter, as raw material and freight costs are likely to continue to weigh on full-year revenues.
According to the company's latest estimate, these factors could reduce annual earnings by $0.90 per share. Without the massive inflation problems, full-year earnings would be about 15% higher than the company's current earnings per share
.
Starting point
A potential profit missing out tomorrow should not, in our view, discourage long-term investors. The company is well positioned to cope with commodities supply disruptions and inflation thanks to its strong and diversified product portfolio and consumer willingness to pay more for its brands.
