Procter & Gamble Earnings and Acquisition Not Enough for Investors

Companies and Brands

Published: April 19, 2018 10:45 am

Last Updated: January 12, 2020 12:46 am

Procter & Gamble Co. (NYSE: PG) made a couple big announcements on Thursday. First the firm released its fiscal third-quarter financial results, and then it announced an acquisition. Ultimately, these big moves by the Dow Jones industrial average component were met by investor remorse.

As for the third-quarter report, P&G said it had $1.00 in earnings per share (EPS) on $16.26 in revenue. Consensus estimates had called for $1.00 in EPS and revenue of $16.22 billion. The same period of last year reportedly had EPS of $0.96 on $15.61 billion in revenue.

The firm reported its segments as follows:

Beauty segment organic sales increased 5%.
Grooming segment organic sales decreased 3%.
Health Care segment organic sales increased 1%.
Fabric and Home Care segment organic sales increased 3%.
Baby, Feminine and Family Care segment organic sales decreased 3%.

Looking ahead to the 2018 full year, the company expects organic sales growth to be in the range of 2% to 3% and that EPS will grow between 5% and 8%. The consensus estimates call for $4.19 in EPS on $66.92 billion in revenue for the year.

At the same time, P&G is acquiring the Consumer Health business of Merck KGaA, Darmstadt, Germany, for a purchase price of approximately €3.4 billion.

This acquisition enables P&G to expand its successful consumer health care business by adding a portfolio of differentiated, physician-supported brands across a broad geographic footprint. It also provides P&G with strong health care commercial and supply capabilities, deep technical mastery and proven consumer health care leadership that will complement P&G’s existing consumer Health Care capabilities and brands such as Vicks, Metamucil, Pepto-Bismol, Crest and Oral-B.

Shares of P&G were down 3% at $75.03 Thursday morning, with a consensus analyst price target of $91.40 and a 52-week range of $74.20 to $94.67.