Procter & Gamble (NYSE:PG) is on a roll. The consumer products titan's latest earnings report hit all the right notes for investors, with sales growth speeding up even as profitability improved. These trends combined to push adjusted earnings far higher for the fiscal third quarter. P&G even had good news to report on its cash flow despite a few COVID-19-related challenges.

With that big picture in mind, let's take a closer look at the latest operating trends.

A cart being pushed down the grocery aisle.

Image source: Getty Images.

Sales growth accelerated

The fiscal third quarter ended on March 31, meaning it included most of the COVID-19-related shutdown in China and several weeks of similar measures in the U.S. The disruption hurt a few areas of P&G's business, but overall growth was strong.

In the fabric & home care division, organic sales increased 10% as consumers stocked up on essential supplies. Gains were nearly as robust in the baby care and health care segments, thanks to demand for brands like Pampers and Crest. On the downside, the beauty and grooming divisions were both roughly flat. Yet total sales rose 6% year over year after adjusting for currency exchange swings, acquisitions, and divestitures, marking a surprising acceleration from the previous quarter despite the global pandemic.

Management credited P&G's unique market position for supporting that progress. "The strong results we delivered," CEO David Taylor said in a press release, "are a direct reflection of the integral role our products play in meeting the daily health, hygiene, and cleaning needs of consumers around the world."

Sparkling finances

Other financial metrics were similarly impressive. Core gross margin expanded thanks to the combination of rising prices and reduced commodity costs. That success was amplified by P&G's more efficient selling posture that showed up in reduced selling expenses. Operating margin rose by a full percentage point, and core earnings jumped 15% (on a currency-neutral basis).

P&G converted 113% of its net earnings into free cash flow, which beat management's recently boosted target. As a result, operating cash flow landed at $4.1 billion and is up to $12.6 billion over the past nine months compared to $11.1 billion in the prior-year period.

A steady outlook

The company cited some temporary sales disruptions in China and reduced demand for shaving products in the U.S. because of the COVID-19 pandemic. But the social-distancing efforts and related economic fallout don't appear to be hurting either its supply chain or its growth profile.

P&G still sees organic sales growth landing between 4% and 5% this fiscal year, which implies a slowdown for the fiscal year's final quarter but constitutes impressive gains in this environment. The consumer-staples giant also affirmed a core earnings outlook that calls for adjusted profit to rise between 8% and 11%, reflecting higher profit margins.

Meanwhile, that stellar cash-flow generation will ensure higher direct returns to shareholders. P&G is planning to spend as much as $8 billion on stock buybacks this fiscal year, and with support from its recent 6% payout hike, will deliver roughly the same total to investors in the form of dividends. "Our organization has been doing a terrific job against our near-term priorities," Taylor said, "to meet heightened consumer need and helping society meet and overcome the challenges of this crisis."