P&G Earnings Half Empty & Half Full (PG)

Procter & Gamble (NYSE: PG) posted a 33% earnings gain to $0.92 net EPS, but before a tax gain it showed $0.80 EPS.  Estimates from First Call were $0.78 EPS.  For its next quarter the company is also forecasting $0.98 to $1.00 EPS, while analysts were looking for $1.00 flat; and for its fiscal year ahead it sees earnings of $3.80 to $3.87 EPS versus expectations of $3.85 EPS.

While Wall Street has to be reminded sometimes that this consumerproducts giant usually is conservative in setting its expectations, itsure seems like the street wanted to see more comments aboutexpectations.  Another comment that was worth note was that the companyclaims to have just completed its integration of Gillette, which is abit of a long integration considering how long ago it was acquired.

P&G also noted that gross margin fell 160-basis points to 49.2% ashigher commodity and energy costs reduced margins by about 300-basispoints.  The company did offset some of this with pricing and costsavings, and noted that SGA expenses were down 210-basis points.

Shares were initially indicated lower, but have recovered back to flataround $65.80 in pre-market trading.  Frankly this stock could tradeeither way based upon market direction today.

Jon C. Ogg
August 5, 2008