NEW YORK (TheStreet) -- Procter & Gamble (PG) was rising 2.72% to $80.37 on Friday after the company reported stronger-than-expected earnings in its second-quarter report.
The company reported positive net sales in all sectors (baby, feminine and family care; health care; fabric care and home care) except beauty (-2%) and grooming (0%). Procter & Gamble reported a profit of $3.43 billion, or $1.18 a share, down from $1.06 billion, or $1.39 a share, from the same period one year earlier. Earnings per share, including items, dropped to $1.21 from $1.22 one year ago, while sales ticked up 0.5% to $22.28 billion.
Procter & Gamble's report narrowly surpassed analysts' expectations. Analysts polled by Thomson Reuters projected earnings of $1.20 a share, according to The Wall Street Journal.
TheStreet Ratings team rates PROCTER & GAMBLE CO as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:
"We rate PROCTER & GAMBLE CO (PG) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, increase in net income, increase in stock price during the past year and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company shows weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- PG's revenue growth has slightly outpaced the industry average of 0.8%. Since the same quarter one year prior, revenues slightly increased by 2.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- PROCTER & GAMBLE CO has improved earnings per share by 8.3% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, PROCTER & GAMBLE CO increased its bottom line by earning $3.87 versus $3.12 in the prior year. This year, the market expects an improvement in earnings ($4.27 versus $3.87).
- The net income growth from the same quarter one year ago has exceeded that of the Household Products industry average, but is less than that of the S&P 500. The net income increased by 7.6% when compared to the same quarter one year prior, going from $2,814.00 million to $3,027.00 million.
- The current debt-to-equity ratio, 0.51, is low and is below the industry average, implying that there has been successful management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.43 is very weak and demonstrates a lack of ability to pay short-term obligations.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Household Products industry and the overall market on the basis of return on equity, PROCTER & GAMBLE CO has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- You can view the full analysis from the report here: PG Ratings Report