Can P&G Earnings Trump Colgate & Chattem? (PG, CL, CHTT)

Traders and investors alike look for defensive stocks with certainty of earnings in hard times like these.  Tomorrow we will get earnings from Procter & Gamble Co. (NYSE: PG), and the consumer products giant is definitely among those defensive companies.  Its competitor Colgate-Palmolive Co. (NYSE: CL reported record results this morning.  Investors want to know if the larger rival will be a repeat performance.

For starters, Colgate-Palmolive (NYSE: CL) rose over 2% to $65.22 onactive trading today.  It was able to maintain higher pricing, and itsearnings growth was nearly 20%.  Toothpaste and soap seem recessionproof.  Revenues were up marginally after it had price hikesof about 7.5%.  Colgate also said it was comfortable with 2009 earnings targets.

A much smaller competitor by the name of Chattem, Inc. (NASDAQ: CHTT)makes items like IcyHot, Gold Bond and Dexatrim.  It posted a13% rise in income, but its shares slid 3.6% to $66.63 today. Theyare down about 18% from their high of $82.17.  That is in-linewith the percentage drop of Colgate-Palmolive, but that is also afterCL rose and CHTT fell in today’s trading.

Procter & Gamble is by far the larger company and is probably proxy for the broad economy.  Analysts measured by ThomsonReuters (First Call) have estimates at $1.58 EPS and $20.64 billion inrevenue..  For next quarter, those estimates are $0.85 EPS and $19.2billion in revenue.  And for all of 2009, they are expecting a slightdecline in earnings to $4.19 EPS on nearly a 3% gain in revenue to$84.74 billion.

P&G stock was flat today.  You can probably blame the market forthat after a 2.5% slide in the DJIA. This"defensive and recession-proof stock" is down over 20% from its high of$73.57 last year.

It looks like options traders are bracing for a $2.10 to $2.50 move ineither direction tomorrow.  It is also worth noting this has onlybounced off of $56.00 lows (lower intra-day) just over the last fewdays to get to this $58.22 handle.  Its chart is very weak and we’d saythat the support here might not come into play until around $56.00.  Ifthat level does not hold up, then the low close recently was $56.00 andthe intra-day low was $53.77. 

Jon C. Ogg
January 29, 2009