3 things you’ll want to know when P&G announces its results

The coronavirus pandemic has mixed effects for Procter & Gamble (NYSE:PG). The company is home to some of the world’s most popular consumer packaged goods (CPG) brands, including Tide, Crest, Pantene, Gillette, Charmin and Pampers, to name a few.

Due to COVID-19, sales are increasing for products that help with health, hygiene and home cleaning. Who can forget the fights that broke out in local stores over toilet paper earlier this year? At the same time, revenues are falling for personal care products, where the company has a large market share. You don’t need to shave as often if you work from home.

The company is generating sales in 180 countries, and the coronavirus pandemic is catalyzing varying degrees of profit and damage in each region. When the company releases its results on October 20, here are three things to watch out for.

P&G expects revenue growth to continue. Image source: Getty Images.

People who stay at home use P&G products throughout the home

To start, investors should look at overall revenue growth. The company expects increase revenue by single digits range for fiscal 2021. This will be an indicator for the year ahead if P&G announces revenue growth above this rate to start the year. Additionally, if revenue is significantly higher or lower than the expected annual rate, ask management to update the revenue growth forecast.

The second, and perhaps most important, metric that shareholders will want to target is earnings growth. Companies ranging from Amazon at Home deposit report cost increase associated with operating during a pandemic. Understandably, employees who are asked to physically report to work are hesitant and safety-conscious. Companies are finding that they have to pay incentives and bonuses to maintain sufficient staff levels.

Finally, those who follow the stock will want to see how much Procter & Gamble has spent on stock buybacks. The company said it plans to buy between $6 billion and $8 billion of its stock in fiscal 2021. The midpoint of the range would be slightly lower than the $7.4 billion worth of stock that it redeemed in fiscal 2020. Overall, the company expects a return above $15. billion to shareholders through dividends and buybacks in 2021. If P&G reports share buybacks in the current quarter above an annual rate of $7 billion, it could indicate that management believes its stocks are undervalued.

A woman wearing a mask cleans a television set.

P&G plans to repurchase approximately $7 billion of its own stock in fiscal 2021. Image source: Getty Images.

The coronavirus pandemic will affect shopping behavior in the short term

Changes in consumer behavior will be important in determining short-term results. When stay-at-home orders were first issued, people started stocking up with a view to hunkering down and making fewer trips to stores. Panic buying has been alleviated to some extent as people feel safer and local governments allow more movement. That being said, purchases of basic necessities remain high.

The diversification of the company’s product portfolio helps insulate it from the negative effects of the coronavirus. Despite the uncertainty surrounding the pandemic, Procter & Gamble expects earnings growth of 8% in fiscal 2021. Analysts follow this stock of basic consumer goods expect earnings of $1.41 for the quarter and overall revenue of $18.3 billion when the company releases its report on Oct. 20. If P&G posts better-than-expected earnings and raises its guidance for fiscal 2021, expect stocks to appear after the report.

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