This Stock Is Leading the Dow

The market is largely directionless today as traders take a breather in the midst of an otherwise disappointing third-quarter earnings season. As of 2:45 p.m. EDT, the Dow Jones Industrial Average (INDEX: ^DJI  ) , the most watched blue-chip index, is up a mere 17 points, or 0.13%.

By comparison, the best-performing stock on the Dow, Procter & Gamble (NYSE: PG  ) , is hurtling upward, higher by more than 3% in intraday trading. The move relates to P&G's third-quarter earnings, which it reported earlier today.

How did P&G perform?
P&G notched an impressive beat on the bottom line while coming up slightly short with respect to sales. Core earnings were $1.06 per share versus the average analyst estimate of $0.96. Sales of $20.7 billion were roughly in line with expectations, and gross margin improved from 49.8% to 50.1%.

The bottom-line beat is a relief to P&G's CEO, Bob McDonald. Over the last year, McDonald has been fighting against activist hedge fund manager William Ackman to retain control of the consumer products giant. Ackman's fund, Pershing Capital Management, took a $1.8 billion stake in the company and has since agitated for cost reductions and a changeover at the top.

Even Warren Buffett, the chairman and CEO of Berkshire Hathaway (NYSE: BRK-A  ) (NYSE: BRK-B  ) , which owns a 2.2% stake in the company, recently jumped into the fray. In an interview yesterday on CNBC, Buffett said:

What goes on inside the place, what mistakes have been made, what the plans are, I don't know the answers on that. The jury's out on that now, because they have disappointed in terms of earnings, and we'll see what happens. I know the board is actively engaged and trying to come up with a strategy they think makes sense to take the earnings forward.

These comments aside, McDonald has likely bought himself time with the third-quarter results and a number of cost-saving measures that have either been implemented or are in the works. Earlier in the year, the company announced a $10 billion restructuring plan targeted toward improving productivity. And on a conference call today, McDonald said, "We're focused on embedding a culture of productivity in the company that's equal to our culture of innovation." Needless to say, the proof is in the pudding.

The Foolish bottom line
With a couple of weeks left in earnings season, investors are bound to experience continued volatility in the market. As a result, today's respite should be a welcome break.

Warren Buffett's long track record of success has made him one of the best investors of all time. With Buffett at the helm, Berkshire Hathaway has grown book value per share at a compounded annual rate of 19.8% for nearly 50 years! Despite the incredible historical track record, investors have to understand the key issues to watch moving forward. To help investors, The Fool's resident Berkshire Hathaway expert, Joe Magyer, has created this premium research report on the company. Along with this in-depth analysis, you'll receive ongoing updates as key news hits and reasons to both buy and sell the stock. Claim a copy by clicking here now.


Read/Post Comments (0) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2076697, ~/Articles/ArticleHandler.aspx, 10/23/2014 6:28:12 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement