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Market Update

Earnings on Tap: Procter & Gamble

Despite its extensive brand reach and wide moat, Procter & Gamble is not likely to regain significant market share over the near term.


 Procter & Gamble (PG) is slated to release its latest numbers ahead of the bell Friday with the consensus estimate calling for earnings of $1.11 per share compared with $0.57 per diluted share reported in the year-ago period.

The consumer products giant posted better-than-expected results in the first quarter, with core earnings up 5% at $1.06 per share. The stock jumped past $70 mark on heels of the report for the first time since October 2008.

The company said it aimed to cut expenses beyond its initial $10 billion restructuring plan announced early last year.

Earlier this month, P&G announced changes to its board of directors. The company said current director Johnathan Rodgers would not seek re-election, and Terry Lundgren was appointed to replace him. The move comes in wake of harsh criticism from various investor circles as well as analysts over P&G's excessive cost structure.

Despite the criticism directed at P&G, Morningstar analyst Erin Lash continues to regard the firm as a wide-moat giant that enjoys the benefits of scale with an extensive global manufacturing and distribution network and unprecedented brand reach. However, because its pricing and brand power have exhibited signs of deterioration, Lash doesn't expect market share losses to meaningfully revert over the near term.

The stock is off to a good start this year, up more than 4%, and is presently trading slightly above Morningstar's fair value estimate.

Gazala Parveen does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.