Procter & Gamble Shares Hit Fresh All-Time Highs

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P&G Shares Higher Again on Thursday

Following a 1.7% rally yesterday, shares in Procter & Gamble (the largest global producer of consumer goods) are trading higher by 1.69% pre-market on Thursday.

The US company has enjoyed bumper gains this year, with its share price rally by roughly 50% from the year to date lows. Procter & Gamble shares were quick to recover from the lows recorded during the height of the COVID-19 pandemic, boosted by a solid set of Q2 earnings.

Procter & Gamble posted Q2 earnings per share of $1.07, beating estimates of a $1.01 reading. While earnings were higher over the quarter, revenues actually undershot expectations. They missed forecasts for the first time in five quarters. In sum, revenues were seen at $18.24 billion, less than the $18.37 billion forecasted.

Challenges Ahead But Progress Noted

Commenting on the quarter, Procter & Gamble CFO Jon Moeller said:

“We continue to face the challenges of a very volatile macro and geopolitical landscape and a competitive response to our growth, but all-in, we’re continuing to make progress behind a set of integrated and mutually reinforcing strategies”.

Looking at the breakdown of the earnings report, net sales were seen higher by 5%. Sales were boosted by strong growth in the company’s health care and beauty units.

The group’s healthcare business, which accounts for brands such as Oral B and Vicks, recorded organic sales growth of 7% across the quarter. Its beauty business saw an 8% rise. The increase in its beauty business was driven by double-digit growth in skin and personal care products. These are headlined by brands such as Olay and SK-II.

Meanwhile, the group’s fabric and home care business recorded organic sales growth of 5% over the quarter, headlined by brands such as Tide and Ariel.

Sales Growth Forecasts Revised Higher

Looking ahead, the company’s CFO said that the main concerns are the spread of coronavirus in its two main markets; the US and China.

Moeller said, “I have no idea what the investments are going to be relative to the new virus.”

The company forecasts sales growth of 4% – 5% over the fiscal year in 2020. This marks an upward revision from its prior 3% – 5% range forecast in Q1. Core earnings per share are also forecast to increase to 8% – 11% from the prior 5% – 10% range.

Procter & Gamble Rally Continues

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Shares in Procter & Gamble continue to rally higher within the broad bullish channel which has framed the rally off year to date lows.

With price now breaking out above the 139.57 level to fresh all-time highs, the short term view remains bullish.

However, the RSI indicator is flagging bearish divergence. Should we see any correction here, the main support zone to watch is down at 127.85.

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