3 Takeaways From Procter & Gamble Earnings

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

Procter & Gamble (NYSE: PG  ) is going through some changes. The consumer goods giant announced earnings results this week, with the good news being that it met its (lowered) sales growth target. Unfortunately, the company also gave a weak forecast for the upcoming fiscal year.

P&G's fiscal 2013 wasn't bad. It saw annual earnings tick up by 5%, to $4.05, on a 1% rise in sales. Organic sales growth was 3%, smack in the middle of the 2% to 4% forecast that P&G provided late last year. But profitability fell as rising expenses offset the company's cost cuts. Overall, the company's turnaround appears to be plodding along.

Volume gains return
P&G reported good volume growth in three of its four business segments last quarter. Health, baby, and home care all kicked in gains of at least 4%, while grooming was flat. That's about even with Unilever, which has been boosting sales volumes by 3% lately.

In fact, P&G may be clawing back some of the market share it lost to its major rival. It held or grew share in most of its brands last quarter, with particularly strong performance in the U.S. For its part, Unilever called the North American market "sluggish."

Shareholders get paid
Procter & Gamble returned tons of cash to shareholders this year. The company spent $12.5 billion -- or 110% of its earnings -- on dividends and share repurchases. That represents more than 5% of the company's market cap in direct returns to investors.

And it expects that massive transfer pace to continue at least for the next year. P&G sees itself spending $6 billion on dividend payments over the next 12 months, and about $6 billion more on buying back shares.

Outlook is soft
However, 2014 will be another transition year for the company. P&G's annual outlook pegs growth at 3% to 4%, just keeping pace with the overall market. And earnings will come in below the company's long-term growth targets -- unless it hits the very top end of its guidance.

New CEO A.G Lafley was frank with investors about the challenges that P&G faces. In the conference call with analysts, he said, "we know we're not winning, like we know we can, and we are committed to make the changes we know we need to make to improve P&G's performance significantly." Until those big performance gains kick in, analysts expect P&G to earn $4.32 per share next year, or just 7% better than this year's haul.

Dividend stocks can make you rich. It's as simple as that. While they don't garner the notoriety of high-flying growth stocks, they're also less likely to crash and burn. And over the long term, the compounding effect of the quarterly payouts, as well as their growth, adds up faster than most investors imagine. With this in mind, our analysts sat down to identify the absolute best of the best when it comes to rock-solid dividend stocks, drawing up a list in this free report of nine that fit the bill. To discover the identities of these companies before the rest of the market catches on, you can download this valuable free report by simply clicking here now.

Read/Post Comments (0) | Recommend This Article (1)

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.

Compare Brokers

Fool Disclosure

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: 2576315, ~/Articles/ArticleHandler.aspx, 9/28/2016 6:36:31 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...

Today's Market

updated 9 hours ago Sponsored by:
DOW 18,228.30 133.47 0.74%
S&P 500 2,159.93 13.83 0.64%
NASD 5,305.71 48.22 0.92%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/27/2016 4:01 PM
PG $88.36 Up +0.51 +0.58%
Procter and Gamble CAPS Rating: ****