Procter & Gamble: Growth And Income Buy Alert

Procter & Gamble Co. (PG), which offers an outstanding record of positive surprises on earnings, outperformed the Dow (^DJI), S&P 500 (^GSPC) and NASDAQ (^IXIC) in 2008.

Company Description

Procter & Gamble Company is a major household products and cosmetics company, which manufactures and markets over 300 brand name products in more than 160 countries. The company is well known for impressive product development capabilities, marketing prowess, and a strong global distribution network. Procter & Gamble s products enjoy strong brand name recognition.

In fiscal 2008, the company derived 44% of total revenue from North America, 30% from developing markets, 22% from Western Europe, and 4% from Northeast Asia.

Strong Results Reflect Quarterly Growth

On October 29, 2008, Procter & Gamble reported results for the first quarter of fiscal 2009 ending September 30, 2008. Quarterly earnings (excluding one-time items) were $1.03 per share, increasing 14.4% year-over-year from $0.90 per share reported in the year-ago quarter and topping the consensus estimate by 3%.

Net sales increased 9.0% year-over-year to $22.0 billion. Top line growth was comprised of strong unit volume growth (+2%), good pricing (+3%), and favorable currency translation (+5%). In addition, successful product launches, supported by marketing initiatives, contributed to sales growth during the quarter.

Some of the company‘s key brands (including Gillette, Fusion, Head & Shoulders, Cover Girl, Gain and SK-II) posted double-digit volume growth. Organic sales (which exclude the impact of acquisitions/divestitures and foreign exchange increased 5%.

All three Global Business Units (GBU) performed well in the reported quarter: Beauty (+12%), Household Care (+10%), and Health and Well Being (+4%).

Rising Forecasts

In addition to having an outstanding record of positive surprises on earnings, the company is seeing bullish projections from Wall Street.

Analysts are calling for earnings of $4.29 per share for the year ending June 2009. Two months ago, the consensus estimate stood at $4.18.

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