Procter & Gamble (NYSE:PG) will publish the first-quarter results of its fiscal year 2021 in just a few days. The consumer staples giant has attracted more investor attention lately as the pandemic has Wall Street looking for steady sources of growth, cash flow, and dividend income.

P&G surpassed expectations on core metrics like these in each of its last few earnings reports and has a good shot at surprising investors again when it reports earnings on Tuesday, Oct. 20.

Sales updates

P&G was in the middle of its best expansion pace in years when the pandemic struck and pushed demand up to new levels. Panic-buying and pantry-stuffing for products like Tide detergent and Bounty paper towels pushed organic sales higher by 10% during the peak shutdown period in April and May.

A person cleaning a kitchen surface.

Image source: Getty Images.

In late July the company gave investors a few reasons to follow this metric closely when it revealed a growth slowdown to 6% in the fiscal fourth quarter. That beat expectations and suggested a strong market share performance against peers like Kimberly-Clark (NYSE:KMB). But the figure suggested growth might continue decelerating in fiscal 2021.

That's exactly what CEO David Taylor and his team have predicted for the fiscal year that just started, and this quarterly report will add context to that conservative forecast. Beyond the headline number, keep an eye on the balance between rising volumes and increased prices. Another period of volume-led sales growth at 4% or above would be great news for the strength of the business.

About those costs

P&G has already cut billions of dollars out of its expense infrastructure since 2013, but management isn't done slashing costs. There are unavoidable industry headwinds here to worry about, after all, including COVID-19-related supply chain challenges and rising commodity costs. And P&G is feeling more urgency around this issue now that Kimberly-Clark is closing the profitability gap. These issues have P&G stressing efficiency even more as it enters fiscal 2021.

PG Operating Margin (TTM) Chart

PG Operating Margin (TTM) data by YCharts

Look for more aggressive cost-cutting moves in this report. These initiatives will ultimately show up in P&G's operating margin and support robust free cash flow while keeping profitability comfortably above 20% of sales.

Looking ahead

P&G's latest outlook calls for sales growth to slow to between 2% and 4% in 2021 compared to 6% last year. Kimberly-Clark is predicting slightly faster gains, but the owner of the Huggies diaper brand may update that figure in its own earnings report on Oct. 22.

In the meantime, P&G could take the opportunity to affirm or even boost its outlook for cash return spending and profitability. Management has a good track record of improving these metrics even in a sluggish sales environment.

That's one key reason why P&G rarely lacks the resources it needs to invest in growing the business or in returning cash to shareholders through dividends and stock buybacks. It also helps explain why the consumer staples giant is a safe stock for investors to consider during economic slumps.

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