Why Procter & Gamble Will Move the Dow Tomorrow

Tomorrow morning, the consumer-products giant will announce its latest earnings. Find out what investors expect to see.

Apr 22, 2014 at 4:30PM
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The Dow Jones Industrials (DJINDICES:^DJI) posted a solid 65-point rise Tuesday, with investors continuing to send the stock market higher as most companies have outperformed the lowered expectations shareholders had for quarterly earnings results. The Dow's earnings season continues tomorrow as Procter & Gamble (NYSE:PG) weighs in on the consumer-goods front with its quarterly report. What it reports will have implications for its own stock and for the Dow and the broader market, especially in light of what P&G's results will mean for Clorox (NYSE:CLX) and other competitors.

Procter & Gamble will announce its first-quarter results before the market opens Wednesday morning, possibly as early as 7 a.m. EDT based on reporting times in past quarters. Procter & Gamble will then discuss the results during a conference call scheduled to begin at 8:30 a.m. EDT.

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Source: P&G.

Investors expect Procter & Gamble to produce modest growth in both earnings and revenue, although they've cut back those expectations over the past several months. With its vast scope as a multinational corporation with truly global reach, Procter & Gamble is vulnerable to economic trends throughout the world, and the company recently reduced its guidance for the quarter based on the Venezuela's currency devaluation. With political risks extant across the globe, risk management is a key element of Procter & Gamble's business success.

Yet Procter & Gamble is also working hard to make the same efficiency gains that other companies have struggled to achieve. The best example came earlier this month, when P&G said it would sell a substantial portion of its pet-food business to Mars for $2.9 billion, allowing the consumer-goods giant to rid itself of a division that has been plagued with recall problems and instead focus on its areas of greatest strength. At the same time, Procter & Gamble is trying to get back to its innovative spirit, looking to introduce new products that will introduce new customers to P&G's line while inviting back those who might have given up on the company.

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Source: P&G.

For Dow investors, Procter & Gamble gives an important read on the health of the consumer economy both in the U.S. and around the world. For investors in Clorox and other competitors, P&G's results will offer insight and a useful comparison against which to measure their own success. And for the stock market in general, what pushes P&G's growth is likely to be relevant for companies worldwide that rely on the same economic trends to drive their businesses forward.

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Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends Procter & Gamble. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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