P&G Earnings Come With No Real Growth

For the full year, P&G posted adjusted diluted EPS of $4.22 on revenues of $83.06 billion. Consensus estimates called for EPS of $4.19 on sales of $83.86 billion.

The company has had a rough time lately, and the woes of Europe and Russia are not helping matters for P&G. The stock price has fallen from almost $86 and was back under $78 Thursday. The company trades at an earnings multiple 17.2 times the fiscal year earnings in June of 2015. And that is based on 7.6% earnings per share growth on only 2.6% revenue growth.

P&G’s guidance for its 2015 fiscal year includes a forecast for organic revenue growth in the low-to-mid single digit range, including a 1% negative impact from foreign exchange rates. Adjusted EPS is expected to rise at a mid-single digit rate, which excludes an expected $0.20 per share for restructuring charges.

Based on 2014 results, the 2015 forecast should be in a range of about $4.39 to $4.47 (figuring on growth of 4% to 6%), compared with a current consensus estimate of $4.51. The revenue forecast, including the negative impact of currency exchange effects, implies 2015 revenues in a range (up 1% to 6%) of about $83.09 billion to $88.04 billion, compared with a consensus estimate of $86.03 billion.

The company’s CEO said:

We met our objectives in a very difficult operating environment, delivered strong constant currency earnings growth, and built on our strong track record of cash returns to shareholders. Still, we have more work to do to deliver the profitable sales growth and strong cash productivity we are capable of delivering. We will discuss our going-forward strategy and plans to further strengthen our results during our earnings call this morning.

P&G did not provide a forecast for the first quarter of its new fiscal year, but the consensus calls for revenues of $21.31 and EPS of $1.15. The company has missed top-line estimates in two consecutive quarters even though profit estimates have been met.

P&G shares were up about 1.7% in premarket trading, at $78.60 in a 52-week range of $73.61 to $85.82. Thomson Reuters had a consensus analyst price target of around $87.00 before the report.

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