Procter & Gamble (NYSE:PG) stock is limping into its upcoming earnings report, meaning many investors believe its recent growth spike was just a temporary lift brought on by the global pandemic. Yet the business has been producing impressive sales, profit, and cash flow results even compared to industry rivals like Kimberly-Clark (NYSE:KMB). And P&G executives have been predicting that demand for its staple products will remain elevated likely long after the COVID-19 threat has passed.

We'll get some more clues about which of these competing growth outlooks is about to occur when the company announces its fiscal third-quarter results in just a few days. So, let's preview that report, due out on Tuesday, April 20.

A mother and daughter play while doing laundry.

Image source: Getty Images.

Winning market share

Investors are bracing for a growth slowdown starting this quarter as the company begins to go up against extreme demand surges from the pantry-stocking phase of the pandemic last year. Sales should rise by about 4% to $18 billion, according to Wall Street pros, or about half of last quarter's increase. The growth pressure will continue from there as the fiscal fourth quarter runs through late June.

But the better metric to follow is market share, which has been an unqualified bright spot for P&G lately. Organic sales rose 8% last quarter to trounce Kimberly-Clark's boost. The company is getting a solid contribution from both rising volumes and higher pricing, too, which suggests it has room to continue winning over new households while marketing more premium products like Tide Pods.

Outperforming on costs

P&G has a brighter earnings outlook than Kimberly-Clark, thanks to the combination of rising demand for those high-margin products and an aggressive cost-cutting program that's cleaved billions out of its expenses in the past few years. In fact, while consumer staples peers like PepsiCo are warning about falling cash flow and declining operating margin, P&G just raised its cash return target.

PEP Operating Margin (TTM) Chart

PEP Operating Margin (TTM) data by YCharts

Another solid sales outing should have management talking up those cash returns on Tuesday. Most of that cash will come from stock buybacks, but P&G clearly had room to significantly boost its dividend -- which it did just days before its earnings announcement. Its 10% hike was a boom compared to last year's 4% increase.

Looking ahead

CEO David Taylor and his team raised P&G's sales and profit outlooks back in late January. The company is expecting just a modest slowdown in some of its core consumer staples niches like laundry and home maintenance even as other categories, like beauty and shaving, rebound after social-distancing pressures ease.

Those trends had the company targeting as much as a 5% organic sales boost for fiscal 2021, which ends in June. Without giving a specific forecast, management is also predicting that the business will settle back down at a higher performance level after the virus is brought under control by vaccines. "The relevance of our categories in consumers' lives potentially increases," CFO Jon Moeller said in late January.

Investors might get some hints to that sustained relevance bounce with P&G's updated outlook for the final quarter of its fiscal year. Big increases there will imply a bright future ahead for the business, and for investors' returns.

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