If it's true that it takes at least three data points to establish a trend, then Procter & Gamble (PG 0.65%) is officially in rebound mode. The consumer staples giant this week announced its third straight quarter of market-beating sales gains that put more distance between itself and rivals like Kimberly Clark (KMB 0.36%). P&G managed to protect profitability in its fiscal third quarter, too, with the help of cost cuts and higher selling prices.

These wins convinced management to hike its sales outlook for the second straight quarter, but this latest upgrade was far more aggressive than the one investors saw back in January.

More on that brightening forecast in a moment. First, here's how the headline operating results stacked up against P&G's prior year. 


Q3 2019

Q3 2018

Growth (YOY)


$16.5 billion

$16.3 billion


Net income

$2.8 billion

$2.5 billion


Earnings per share




Data source: P&G's financial filings.YOY = year over year.

Pushing through price changes

Net sales inched higher by 1%, but growth was far stronger after accounting for foreign currency exchange rate shifts. P&G's core earnings per share expanded at a faster rate due to a mix of positive impacts from cost cuts, price increases, and share repurchases.

A woman shopping for detergent

Image source: Getty Images.

The key highlights of the quarter:

  • Organic sales jumped 5% to improve upon the 4% rate P&G managed in each of the last two quarters. The improvement marked its best quarterly growth rate in years and translated into market-share wins against peers like Kimberly Clark, which recently grew sales at a 3% pace.
  • By category, P&G's beauty and fabric care segments led the way higher thanks to strong demand in franchises like Tide detergent and SK-II skin care. The grooming category, home to Gillette razors and blades, was its weakest performer.
  • P&G achieved a balanced mix of higher prices and rising sales volumes. Kimberly Clark, in contrast, had to rely on price increases to deliver all of its revenue growth.
  • Gross profit margin increased by 0.6 percentage points as cost cuts and price boosts offset higher commodity costs. However, P&G spent more on marketing and other selling expenses so that operating margin dipped slightly.
  • Core earnings, which strip out the impact of exchange-rate moves and unusual charges, rose 15% to $1.15 per share.

What management had to say

CEO David Taylor stressed P&G's operating and financial wins in the period while noting that the company still faced "a challenging competitive and macroeconomic environment." Despite those issues, "we delivered another quarter of strong organic sales growth," Taylor said, "enabling us to further increase our outlook for the year." He continued, "cash generation also remains strong, supporting an increase in our cash productivity target and extending our long track record of dividend increases."

Looking forward 

Taylor and his team paired those positive words with an aggressive outlook upgrade. P&G now sees sales rising by 4% this year compared to the prior prediction of roughly 3%. Hitting that result would mark its fastest annual expansion pace since before it launched its portfolio reboot strategy in 2014. It contrasts favorably with the 2% uptick Kimberly Clark is projecting.

Investors had to wait for several years to see concrete evidence that P&G's many rebound initiatives were working. But management's changes appear to have finally put the company back on a path of steady market-share growth.