I went shopping at Costco
When consumers hear the names Procter & Gamble, or rivals Johnson & Johnson
One company producing tremendous results because of this brand loyalty is Procter & Gamble. One look at P&G's robust fourth-quarter results proves my point: The company's earnings shot up 44% from last year and its earnings per share landed $0.02 above the analysts' consensus estimate ($0.50 vs. $0.48). Net sales were up an impressive 19%, and P&G's "organic" growth (which excludes the impact of acquisitions and divestitures) was a solid 10%. While revenue growth was healthy, the real star of the quarter was the company's gross margin improvement. P&G counteracted commodity price increases with restructuring, volume efficiencies, and an effective cost-reduction program.
The icing on the cake for Procter & Gamble was its expectation that fiscal 2005 first-quarter earnings will be at the upper end of the current $0.69 to $0.72 per-share range. The company's cost-conscious nature and mass buying strategy should also aid future results. Consumers might be cutting back on some luxury and other discretionary spending items, but they will always need to purchase P&G's line of basic goods. I see the shares, which carry a dividend yield of 1.92%, as a great purchase for income investors.
What are your favorite branded items? Share your picks at the Procter & Gamble discussion board.
Fool contributor Phil Wohl spent more than 12 years on Wall Street and now concentrates his writing on more fictional characters. He has no stake in any firm mentioned above.