Best Consumer Staples Stocks To Buy In June

Key Insights

  • The stock market remains under pressure amid worries about high inflation. 
  • Consumer staples stocks may serve as safe-haven assets in the current market environment. 
  • Procter & Gamble and Walmart look attractive at current levels. 

Investors will continue to search for stocks that could help them protect their funds in an inflationary environment after the recent U.S. Inflation Rate report indicated that Inflation Rate increased by 8.6% year-over-year in May. Consumer staples companies, which make products that are used every day, are one of the segments that could attract investor interest.

Procter & Gamble

Analyst estimates for Procter & Gamble have moved a bit lower in recent months. Currently, the company is expected to report earnings of $5.84 per share in 2022 and $6.23 per share in 2023, so the stock is trading at 23 forward P/E.

This is not cheap for a consumer staples stock, but traders are willing to pay a premium for a company that can raise prices in an inflationary environment.

Earnings estimates are moving lower as the company’s costs are also increasing due to inflation, but the stock will likely outperform the broader market in case the broad sell-off continues.

Walmart

Walmart stock has found itself under significant pressure after the release of its first-quarter report in May. As a result, the stock declined to levels that were last seen back in July 2020.

Not surprisingly, analyst estimates have moved lower in recent weeks. The company is expected to report earnings of $6.41 per share in the current fiscal year and earnings of $6.96 per share in the next fiscal year, so the stock is trading at 17 forward P/E.

The key question for investors is whether risks have been already priced in by the market. Walmart declined from the $160 level to the $120 level in less than two months, so the stock may attract speculative traders and investors who are willing to bet that the strong sell-off was not justified.

To keep up with the latest earnings updates, visit our earnings calendar.

Strong U.S. Dollar Biting Into Multinationals

“A hawkish Federal Reserve and heightened geopolitical tensions have driven a 14% gain in the U.S. dollar against a basket of currencies over the last year, forcing companies such as Cocoa-Cola Co (KO.N) and Procter & Gamble (PG.N) to temper expectations for the rest of the year.”

Microsoft is one of the latest companies to warn of a fourth-quarter currency headwind.

The following was reported by Reuters on June 2, 2022: “Microsoft warns of forex hit; cuts forecast”

Microsoft Corp (MSFT.O) on Thursday cut its fourth-quarter forecast for profit and revenue, making it the latest U.S. company to warn of a hit from a stronger greenback.”

1 year performance of U.S. Dollar

Source: Finviz

U.S. DOLLAR PAIRS • FOREX • DAILY

U.S. Dollar Pairs

USD ETF UP +16.31%

Over the course of the last year, the U.S. dollar Bullish ETF (UUP) has gained +$3.94 or +16.31%. This is at a time when the U.S. stock indices have a current year-to-date loss of DJIA 30 -9.46%, S&P 500 -13.80%, and Nasdaq 100 -23.11%.

Since the U.S. Dollar was put at a major low on January 6, 2021, the trend has been solidly up.

INVESCO DB USD INDEX BULLISH FUND ETF • UUP • ARCA • DAILY

UUP Daily Chart Up Trend

USD RETRACEMENTS ARE IN THE 2-4% RANGE

As professional traders who study prices, we see that the maximum pullback in the U.S. dollar has been 57 days and -4.4%. The recent pullback in the UUP (US Dollar Bullish ETF) has only been 15 days, or -3.24%. This 3-week pullback or more importantly the retracement of -3.24% is safely within the previous retracement data sets.

UUP (USD) remains in an uptrend and until the price confirms otherwise we should consider this trend will continue. There are significant headwinds ahead for stocks and especially multinational companies whose revenues and earnings are being diminished by the strong USD.

INVESCO DB USD INDEX BULLISH FUND ETF • UUP • ARCA • DAILY

UUP Daily Chart Retracement

USD HEADWINDS CAUSING PROBLEMS FOR NASDAQ COMPANIES

The NASDAQ QQQ ETF remains solidly in a bear market as the U.S. dollar continues to batter revenue and earnings for these global companies.

It should come as no surprise that the recent bounce in the QQQ occurred at 50% of the post-Covid bull market rally. This bull rally was +$235.83 and 50% of this is $117.91. The QQQ found temporary support about -$1.00 below the 50% level with its drop of -$118.90.

Due to globalization, most if not all of the NASDAQ 100 QQQ companies will feel the effect of the USD headwinds. Most of the group is a true multinational but for those whose business solely focuses on the U.S. market, their revenues and earnings will still be impacted by the non-USD origin of their products and or support services (manufacturing, cost of goods, etc.).

Note: Inflation is causing increases in company product/service increased pricing resulting in consumer cutbacks that may cause “The Perfect Storm” in the fourth quarter.

INVESCO QQQ TRUST ETF • QQQ • NASDAQ • DAILY

QQQ Daily Chart Down Trend

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Best Consumer Staples Stocks To Buy Now

Key Insights

  • Consumer staples stocks provide safety during uncertain times. 
  • These stocks have recently enjoyed strong support amid geopolitical uncertainty and rising yields. 
  • Typically, such companies pay a modest dividend, which is increased year after year and provides an additional source of income for investors. 

Investors remain worried about the negative impact of rising interest rates and high commodity prices, so they search for potential safe-haven assets. One of the segments that could perform well in the inflationary environment is the consumer staples market segment. Typically, such companies can raise prices in line with inflation as they produce essential products which are in demand in every economic situation.

Procter & Gamble

Procter & Gamble stock has moved away from March lows as demand for safe-haven assets increased. Currently, analysts expect that the company will report earnings of $5.86 per share int he current year and earnings of $6.31 per share in the next year, so the stock is trading at 25 forward P/E.

This is not cheap, but traders are ready to pay a premium for safety in the current environment. A safe dividend with a forward yield of more than 2.3% serves as an additional positive catalyst for conservative investors.

Colgate-Palmolive

Colgate-Palmolive is trading at 23 forward P/E, so it is a bit cheaper than Procter & Gamble. The forward dividend yield is about 2.35%. The stock touched its yearly lows in March and started to move higher, driven by the same catalysts that pushed Procter & Gamble closer to the all-time high levels.

Coca-Cola

This classic widow-and-orphan stock is up by more than 9% year-to-date, compared to S&P 500 , which has lost more than 5% of its value since the beginning of this year.

Coca-Cola is trading at 25 forward P/E and has a forward yield of about 2.7%. Interestingly, the stock gained strong upside momentum this year, and it has a good chance to move even higher in case demand for safe-haven assets stays strong.

For a look at all of today’s economic events, check out our economic calendar.

Procter & Gamble Nears Low-Risk Buying Opportunity

Dow component Procter & Gamble Co. (PG) could offer superior returns for market players seeking a strong technical pattern and reliable dividend payout. The timing could be perfect because the stock just bounced at support generated by a 12-month cup and handle breakout in November, raising odds the 3-month correction is drawing to a close. Accumulation has barely budged during the downturn, indicating that shareholders have no intentions of jumping ship.

Cost-Cutting Programs Paying Off

The household goods giant is engaged in multiyear cost-cutting and reorganization focused on brand superiority that makes it easier to raise prices. That’s especially important right now, with rising inflation cutting into profit margins throughout the retail space. It’s also perfectly positioned to weather macro political tensions, scaling back Russian business operations and capital investment while continuing sales of basic health, hygiene, and personal care items.

Truist analyst Bill Chappell upgraded the stock to ‘Buy’ on Tuesday, noting “not only do we believe that PG has emerged stronger, but we also believe its focus on product superiority and consumers has accelerated migration to trusted brands over the past two years. As consumer behavior patterns return to a ‘new normal,’ investors will again be able to see PG’s operating momentum, and we believe the stock will therefore restart its period of outperformance”.

Wall Street and Technical Outlook

Wall Street consensus stands at an ‘Overweight’ rating based upon 10 ‘Buy’, 3 ‘Overweight’, 10 ‘Hold’, and 1 ‘Underweight’ recommendation. Price targets currently range from a low of $145 to a Street-high $187 while the stock is set to open Tuesday’s session about $22 below the median $174 target. This modest placement bodes well for continued upside off the corrective low but substantial gains may wait until we get closer to the Q2 earnings release on Apr. 20.

Procter & Gamble broke out above the February 2020 peak at 128.07 in July and rallied to 146.92 in November. It carved a cup and handle pattern into November 2021 and broke out, posting an all-time high at 165.32 in January. The stock broke down from range support at 156 in February, yielding a decline that reached breakout support and the 200-day moving average earlier this month. Positive action since that time has established a trading floor at that level. The company pays a 2.31% forward dividend yield.

Catch up on the latest price action with our new ETF performance breakdown.

Disclosure: the author held no positions in aforementioned securities at the time of publication. 

Why Procter & Gamble Stock Is Up by 4% Today

Procter & Gamble Stock Rallies After Strong Quarterly Report

Shares of Procter & Gamble gained strong upside momentum after the company released its quarterly report.

The company reported revenue of $21 billion and adjusted earnings of $1.66 per share, beating analyst estimates on both earnings and revenue.

Procter & Gamble announced that it had raised the outlook for fiscal 2022. All-in sales growth expectations were adjusted from 2% – 4% to 3% – 4%. Organic sales growth expectations were improved from 2% – 4% to 4% – 5%.

In fiscal 2022, Procter & Gamble expects to pay more than $8 billion in dividends. The company also expects to buy back $9 billion – $10 billion worth of its common stock.

The market has been recently worried about the negative impact of supply chain disruptions and wage growth, but the report indicated that Procter & Gamble remained in a great financial shape. It also looks that traders were ready to increase purchases of lower-PE stocks amid rising Treasury yields.

What’s Next For Procter & Gamble Stock?

Investors look for high-quality names during the times of uncertainty, and Procter & Gamble stock may enjoy an additional boost in case traders remain focused on defensive assets.

Analysts expect that Procter & Gamble will report earnings of $5.91 per share in the current fiscal year and $6.35 per share in the next fiscal year, so the stock is trading at more than 25 forward P/E.

This is not cheap for this type of a company, but what is really cheap in today’s market? S&P 500 has pulled back by about 5% from the recent highs that were reached back at the beginning of this year, but it is up by more than 40% from pre-pandemic levels.

The pressure on high-growth stocks has been visible in recent trading sessions, and Procter & Gamble stock may enjoy additional upside momentum in case capital rotation continues and traders move funds out of high-PE names into safer dividend plays.

For a look at all of today’s economic events, check out our economic calendar.

Procter & Gamble Stock Rise on Earnings Beat, Outlook Revised

Procter & Gamble stock rose over 1% in pre-market trading on Wednesday after the world’s largest maker of consumer-packaged goods reported better-than-expected earnings in the fiscal second quarter and lifted its annual sales outlook.

The Cincinnati, Ohio-based consumer goods corporation said its revenue jumped over 6.0% to $20.95 billion from a year ago. That was also above the market expectations of $20.34 billion. The Gillette razor maker reported quarterly adjusted earnings of $1.66​​ per share for the quarter ended in December, beating the Wall Street consensus estimates of $1.65 per share.

The company, which is also known for laundry detergent and toothpaste, raised its outlook for fiscal 2022 all-in sales growth from a range of two to four percent to a range of three to four percent compared to the prior fiscal year. Additionally, the company raised its guidance for organic sales growth from two to four percent to four to five percent.

According to company guidance, GAAP diluted net earnings per share for fiscal 2022 will grow six to nine percent compared to fiscal 2021 GAAP EPS of $5.50. The Company expects core earnings per share to grow three to six percent for fiscal 2022 versus fiscal 2021 Core EPS of $5.66.

Following this, Procter & Gamble stock rose over 1% in pre-market trading to $158.99 on Wednesday after closing 1.93% lower at $156.73 a day before. The stock slumped over 4% so far this year after surging more than 17% in 2021.

Analyst Comments

“Net, we expect a solid 3% Q2 topline beat (6% org sales was well above the 3.7% consensus and also the higher ~5% street expectation), but modest 1.1% profit miss vs consensus (EPS was a penny ahead on below the profit line items), and reiterated FY EPS guidance, to have only a muted stock reaction, as we believe the market generally expected topline upside and GM downside,” noted Dara Mohsenian, equity analyst at Morgan Stanley.

“Ultimately, similar to last quarter, we see Procter & Gamble’s (PG) results as likely to be better than household products peers in a very challenging cost environment, with PG increasing its full-year cost/FX guidance headwind by ~400 bps to EPS, but maintaining FY EPS guidance with a 150 bp raise in organic sales guidance.”

Procter & Gamble Stock Price Forecast

Nine analysts who offered stock ratings for Procter & Gamble in the last three months forecast the average price in 12 months of $166.89 with a high forecast of $185.00 and a low forecast of $146.00.

The average price target represents a 6.48% change from the last price of $156.73. From those nine analysts, six rated “Buy”, three rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $161 with a high of $187 under a bull scenario and $107 under the worst-case scenario. The investment bank gave an “Overweight” rating on the consumer goods corporation’s stock.

Several other analysts have also updated their stock outlook. JP Morgan raised the target price to $165 from $164. Evercore ISI lifted the target price to $175 from $163. Jefferies upped the target price to $185 from $163.

Technical analysis also suggests it is good to buy as 100-day Moving Average and 100-200-day MACD Oscillator signals a strong buying opportunity.

Check out FX Empire’s earnings calendar

In The Spotlight – Big Wall Street Banks as the Main Power in S&P 500

Banks’ earnings

Big Wall Street banks are in the spotlight right out of the gate with Goldman Sachs set to release results before markets open. They will be followed by Bank of America, Morgan Stanley, and U.S. Bancorp tomorrow (Wednesday). Bank results got off to a mixed start on Friday. JPMorgan Chase, Citigroup, and Wells Fargo all topped profit estimates for Q4 but JPMorgan and Citi delivered disappointments in other areas.

In particular, investors are nervous about higher expenses that cut into Q4 profits for both JPMorgan and Citi and which both banks forecast would continue to weigh on results in 2022. JPMorgan and Citi also saw -11% decreases in trading revenue, with fixed income trading down by double digits for both.

There are also signs of slowing loan growth that some analysts worry is an early sign of slowing consumer demand for big-ticket items as inflation continues to climb. While banks will eventually benefit from higher U.S. interest rates that are anticipated in the year ahead, a big pullback in consumer lending is a threat to some of the more lofty Wall Street expectations had for the sector in 2022.

Global economy

Globally, not a lot changed over the extended weekend. China might have provided a bit of a surprise with additional monetary easing into a struggling GDP and sagging real estate prices. It’s worth noting, Omicron has now been detected in Beijing for the first time, just three weeks before the city is due to host the Winter Olympics. Now the Chinese are shutting down and suspending the sale of Olympic tickets to the public.

Tensions remain heated between Hong Kong activists and Chinese government officials. North Korea launched its fourth missile test this month. After North Korea’s missile test last week, the US announced sanctions on eight North Korean and Russian individuals and entities for supporting North Korea’s ballistic missile programs.

Tensions between the U.S. and Russia seem to be headed in the wrong direction with Russia over the weekend moving troops and equipment into Belarus for joint military exercises.

The so-called “Allied Resolve” drills are set to take place near borders with NATO members Poland and Lithuania, as well as Ukraine where Russia has maintained its alarming military presence.

Most U.S. military experts don’t really think Russia has any real intentions of invading Ukraine or any other EU country. However, Western countries also have increased their military presence along borders and other strategic locations which increases the chances that a broader conflict could “accidentally” be sparked.

Europe’s gas supplies are also at risk as Russia continues to dangle the threat of cutting them off. Most of the tension stems from Russia’s demand that former Soviet countries be barred from entering NATO, something the U.S. and other NATO allies have refused.

In the USA, we are heading deeper into earnings season and investors are going to be paying close attention to costs and expenses. As I mentioned, late last week, JPMorgan warned that higher expenses and higher spending on hiring in 2022 could create some headwinds.

Looking ahead, it will be interesting to see how many executive teams start providing guidance and warnings that corporate expenses are rising faster than anticipated and what if any damage will be due to profit margins?

Remember, some companies have said they are passing the additional rising costs on to the consumer while other companies are eating a majority of the higher expenses in an attempt to gain more market share.

How the stock market decides to differentiate the strategy and style could greatly impact money flow and valuations. Goldman Sachs, J.B. Hunt, Charles Schwab, Citrix, Concentrix, and Interactive Brokers report earnings today.

Data to watch

Tomorrow we have Alcoa, Bank of America, Kinder Morgan, Morgan Stanley, Procter & Gamble, and United Airlines.

Thursday we have American Airlines, Baker Hughes, Netflix, and Union Pacific.

Then next week we have big names like Apple, Boeing, Caterpillar, McDonalds, Microsoft and Verizon reporting earnings.

Let’s also not forget next week we have the first Fed FOMC meeting of the new year.

With the U.S. Federal Reserve getting ever closer to implementing its first rate hikes, which most anticipate will begin in March, investors are growing less enchanted with some of the high-growth and momentum stocks that saw outsized share price gains last year.

This trend is most evident in the tech-heavy Nasdaq where nearly half of the index’s stocks have fallen by -50% from their recent peaks. The Nasdaq itself is only down by about -7% from its most recent record high. The selloff has been very much concentrated in highly-leveraged companies that have yet to deliver a profit, as the prospect of higher rates reduce future profit potential. Earnings results from these high-fliers will likely be harshly scrutinized as Wall Street tries to separate the “wheat from the chaff,” so to speak.

On the economic data front, Empire State Manufacturing and the NAHB Housing Market are today’s highlights.

For a look at all of today’s economic events, check out our economic calendar.

Best Stocks, Crypto, and ETFs to Watch – Bank of America, Netflix, Ethereum in Focus

Bank of America Corp. (BAC) sold off in sympathy with JPMorgan Chase and Co. (JPM) in Friday’s session, reacting to the Dow component’s surprisingly weak quarterly revenue. A second day of lower prices on Tuesday could set up a strong buy-the-news reaction when BAC reports in Wednesday’s pre-market session. The stock has the highest relative strength in the elite money center group and is nearing a critical test at 2006’s all-time high in the mid-50s.

Netflix Inc. (NFLX) has been sold aggressively in recent weeks, dropping 27% and failing a breakout above resistance at 600. The streaming giant bounced into Friday’s close after announcing an increase in monthly subscription prices. However, the hike is a two-edged sword because subscriber churn (new subs plus cancellations) could escalate, canceling out revenue gains. The company is likely to comment on the decision when it reports Q4 2021 earnings after Thursday’s closing bell.

SPDR S&P Retail ETF (XRT) fell to a 10-month low on Friday after December Retail Sales ex-auto fell 2.3%, compared to expectations for a 0.2% increase. The shortfall, during the critical holiday sales season, suggests that inflation is impacting consumer buying behavior. Even so, retailers reported strong October and November results, stoked by fears that supply chain disruptions could generate empty shelves. Despite that early buying pressure, smart traders will be watching the fund for a sell signal that offers timely short sale profits.

Ethereum (ETH) could be bottoming out after a two-month slide that relinquished 60% of the cryptocurrency’s value. ETH broke out above May resistance at 4,400 in November, failing the breakout just three weeks later. The subsequent decline reached support at the 50-week moving average about one week ago, with that level narrowly aligned at the .618 Fibonacci rally retracement level. Weekly Stochastics remains in a bearish cycle but is nearing the oversold level, with a bullish crossover set to issue an intermediate buying signal.

Dividend paying stocks continue to outperform growth and value plays in 2022 as investors look for ways to protect portfolios from rising inflation. Dow component Proctor & Gamble Co. (PG) could benefit from this rotation when it reports Q2 2022 earnings on Wednesday. The company is expected to earn $1.65 per-share on $20.34 billion in revenue during the quarter, with that profit perfectly matching results during the same quarter last year. PG, which posted an all-time high on Jan. 6, pays a respectable 2.18% annual dividend yield.

Catch up on the latest price action with our new ETF performance breakdown.

Disclosure: the author held no positions in aforementioned securities at the time of publication. 

Wall Street Week Ahead Earnings: Goldman Sachs, Procter & Gamble, United Airlines, and Netflix in focus

The following is a list of earnings slated for release January 17-21, along with a few previews. A number of big companies will report earnings in the week ahead, including Goldman Sachs and Bank of America, Procter & Gamble, Netflix, and a number of transportation companies. Investors will carefully monitor the latest news on the rapidly spreading Omicron coronavirus variant to see how it affects earnings in 2022.

Earnings Calendar For The Week Of January 17

Monday (January 17)

No major earnings are scheduled for release. The stock market in the U.S. will be closed in observance of Martin Luther King, Jr. Day.

Tuesday (January 18)

IN THE SPOTLIGHT: GOLDMAN SACHS

The New York-based leading global investment bank Goldman Sachs is expected to report its fourth-quarter earnings of $11.89 per share, which represents a year-over-year decline of about 2% from $12.08 per share seen in the same period a year ago.

The world’s leading investment manager would see a decline in revenue of nearly 1% to $11.65 billion from a year ago. It is worth noting that in the last two years, Goldman Sachs has surpassed market consensus expectations for profit and revenue most of the time.

“We expect Goldman Sachs to report mixed results, with revenues outperforming the consensus estimates and earnings missing the expected figure. The investment bank reported better than expected results in the last quarter, with the top-line increasing 26% y-o-y. This was driven by significant growth in the investment banking business, followed by higher global markets and consumer & wealth management revenues,” noted analysts at TREFIS.

“While investment banking grew on the back of growth in mergers &acquisitions (M&A) and equity underwriting deal volumes, global markets benefited from higher equity trading revenues. Similarly, the consumer & wealth management segment gained from an increase in outstanding loan balances. That said, the top-line was partially offset by negative growth in the asset management division, primarily due to lower equity investment revenues. We expect the same trend to continue in the fourth quarter. We estimate Goldman Sachs’ valuation to be around $447 per share which is 14% above the current market price.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE JANUARY 18

TICKER COMPANY EPS FORECAST
BAC Bank of America $0.78
SCHW Charles Schwab $0.83
CNXC Concentrix $2.54
HWC Hancock Whitney $1.33
IBKR Interactive Brokers $0.74
JBHT J.B. Hunt Transport Services $2.0
MBWM Mercantile Bank $0.85
ONB Old National Bancorp $0.38
PNFP Pinnacle Financial Partners $1.56
PNC PNC Financial Services $3.62
PRGS Progress Software $0.62
SBNY Signature Bank $3.92
TFC Truist Financial $1.27
UCBI United Community Banks $0.63

 

Wednesday (January 19)

IN THE SPOTLIGHT: PROCTER & GAMBLE, UNITED AIRLINES

PROCTER & GAMBLE: The world’s largest maker of consumer-packaged goods, is expected to report its fiscal second-quarter earnings of $1.66 per share, which represents year-on-year growth of just over 1% from $1.64 per share seen in the same period a year ago.

The Cincinnati, Ohio-based consumer goods corporation would post revenue growth of over 3% to $20.4 billion from a year ago. It is worth noting that the company has consistently beaten consensus earnings estimates in the last two years, at least.

“We believe strategy changes can sustain Procter & Gamble (PG) LT topline growth in the 4% range. In the US, a strong breadth of performance and share gains give us confidence that market share momentum is sustainable and supports LT topline growth above HPC peers. While near-term pressures from commodity/freight inflation will impact margins, we believe PG has stronger pricing power than peers, particularly with share gains,” noted Dara Mohsenian, equity analyst at Morgan Stanley.

PG trades at ~22.5x CY22e EPS, an HSD% discount to HPC peers CLX, CL and CHD, and looks compelling given our call for higher LT PG growth.”

UNITED AIRLINES: The major U.S. airline company is expected to report a loss for the eight-consecutive time of $-2.12 in the holiday quarter as the aviation service provider continues to be negatively impacted by the ongoing COVID-19 pandemic and travel restrictions.

However, that would represent a year-over-year improvement of about 70% from -$7.0 per share seen in the same period a year ago. The Chicago, Illinois-based airlines would post revenue growth of over 130% to $7.94 billion.

“Despite some headwinds around staffing issues, we expect United Airlines (UAL) to guide to a continued sequential improvement with capacity guided to be down in the 17-18% range in Q1, which incorporates domestic capacity down in the 1% range, while international capacity remains down 27%,” noted Sheila Kahyaoglu, equity analyst at Jefferies.

“Remaining in a Net Loss Position into Q1. We expect a continued sequential decline in CASM-ex to 11.63¢, which reflect a 9% increase vs. 2019 levels, which compares to the 13% increase we expect in Q4. Nonetheless, UAL will remain in a net loss position in Q1, before turning positive in Q2.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE JANUARY 19

TICKER COMPANY EPS FORECAST
AA Alcoa $2.5
ASML ASML Holding $4.3
CFG Citizens Financial Group $1.16
CMA Comerica $1.6
DFS Discover Financial Services $3.48
FAST Fastenal $0.36
FUL H.B. Fuller $1.06
KMI Kinder Morgan $0.27
MS Morgan Stanley $1.83
PACW PacWest Bancorp $1.06
PG Procter & Gamble $1.66
STT State Street $1.93
USB U.S. Bancorp $1.13
UAL United Airlines $-2.12
WTFC Wintrust Financial $1.56

 

Thursday (January 20)

IN THE SPOTLIGHT: NETFLIX

The California-based global internet entertainment service company NetFlix is expected to report its fourth-quarter earnings of $0.82 per share, which represents a year-over-year decline of over 30% from $1.19 per share seen in the same period a year ago.

However, the streaming video pioneer would post revenue growth of over 16% to $7.71 billion. It is worth noting that the company has beaten earnings per share (EPS) estimates just thrice in the last two years.

“We believe share performance is highly dependent on increasing global membership scale. Proven success in the US and initial international markets provides a roadmap to success in emerging markets, and scale should allow Netflix (NFLX) to leverage content investments and drive margins,” noted Benjamin Swinburne, equity analyst at Morgan Stanley.

“Higher global broadband penetration should increase the Netflix (NFLX) addressable market, driving member growth and providing further opportunity given NFLX’s global presence. Longer-term, we see the ability to drive ARPU growth, particularly given increased original programming traction.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE JANUARY 20

TICKER COMPANY EPS FORECAST
AAL American Airlines $-1.72
CSX CSX $0.42
FITB Fifth Third $0.91
ISRG Intuitive Surgical $1.01
KEY KeyCorp $0.56
MTB M&T Bank $3.24
NTRS Northern Trust $1.82
OZK Bank OZK $0.98
PPBI Pacific Premier Bancorp $0.85
PPG PPG Industries $1.2
RF Regions Financial $0.49
SASR Sandy Spring Bancorp $1.1
SIVB SVB Financial $6.29
TRV Travelers $3.77
UNP Union Pacific $2.66
WBS Webster Financial $1.11

 

Friday (January 21)

TICKER COMPANY EPS FORECAST
ALLY Ally Financial $2.0
FHB First Hawaiian $0.47
HBAN Huntington Bancshares $0.37
INFO IHS Markit $0.71
SLB Schlumberger $0.39

 

Procter & Gamble on Track to Beat Earnings Estimates Again

Procter & Gamble, the world’s largest maker of consumer-packaged goods, is expected to report its fiscal second-quarter earnings of $1.66 per share, which represents year-on-year growth of just over 1% from $1.64 per share seen in the same period a year ago.

The Cincinnati, Ohio-based consumer goods corporation would post revenue growth of over 3% to $20.4 billion from a year ago. It is worth noting that the company has consistently beaten consensus earnings estimates in the last two years, at least.

The company forecasts both all-in and organic sales growth are expected to be 2 to 4%. For fiscal 2022, currency movements are expected to have no effect on sales growth. On a reported basis, EPS is expected to increase 6-9%, whereas the company reported $5.50 in fiscal 2021. EPS for fiscal 2022 is expected to increase 3-6% from $5.66 earned in fiscal 2021, according to ZACKS Research.

Procter & Gamble stock was trading 0.42% lower at $158.35 on Thursday. The stock fell over 3% so far this year after gaining more than 17% in 2021.

Analyst Comments

“We believe strategy changes can sustain Procter & Gamble (PG) LT topline growth in the 4% range. In the US, a strong breadth of performance and share gains give us confidence that market share momentum is sustainable and supports LT topline growth above HPC peers. While near-term pressures from commodity/freight inflation will impact margins, we believe PG has stronger pricing power than peers, particularly with share gains,” noted Dara Mohsenian, equity analyst at Morgan Stanley.

PG trades at ~22.5x CY22e EPS, an HSD% discount to HPC peers CLX, CL and CHD, and looks compelling given our call for higher LT PG growth,”

Procter & Gamble Stock Price Forecast

Seven analysts who offered stock ratings for Procter & Gamble in the last three months forecast the average price in 12 months of $163.43 with a high forecast of $185.00 and a low forecast of $146.00.

The average price target represents a 3.27% change from the last price of $158.25. From those seven analysts, four rated “Buy”, three rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $161 with a high of $187 under a bull scenario and $107 under the worst-case scenario. The firm gave an “Overweight” rating on the consumer goods corporation’ stock.

Several other analysts have also updated their stock outlook. JP Morgan raised the target price to $165 from $164. Evercore ISI lifted the target price to $175 from $163. Jefferies upped the target price to $185 from $163.

Technical analysis also suggests it is good to buy as 100-day Moving Average and 100-200-day MACD Oscillator signals a strong buying opportunity.

Check out FX Empire’s earnings calendar

Marketmind: Margin Pressures

Margin pressures for companies and higher prices for shoppers: That’s the message so far from the earnings season.

Just a few examples — Proctor & Gamble expects a $2.3 billion hit to expenses this fiscal year, compared with the previously expected $1.9 billion. Apple, according to a Bloomberg report, may produce 10 million fewer iPhone 13 units, Danone predicts costs to be at least 8% higher, driven by shipping expenses and shortages of plastic and cardboard packaging. Still there is no sign that optimism over earnings has been dented — the S&P 500 index finished Tuesday just 0.4% below its early September record close.

The conclusion perhaps is that companies will be able to pass on higher costs to consumers to protect their bottom lines and indeed, Nestle on Wednesday said price hikes of 2.1% in the third quarter had helped mitigate cost price inflation.

What follows is that consumers will face those higher costs, especially with oil prices close to multi-year highs. The question then is how much central bankers feel the need to react to mounting inflationary pressures.

However, there was some good news for the Bank of England on the inflation front, with price growth slowing unexpectedly in September – it came in at 3.1% compared to 3.2% in August. That may not, however, deter the BoE from raising interest rates in the coming months, with money markets pricing a cumulative 35 basis points of tightening by year-end.

Meanwhile some of the rate hike bets priced for the U.S. Federal Reserve for next year have been pared back following weaker than-expected housing data. That’s taken some of the heat out of short-end Treasuries and instead allowed 10-year yields to rise to four-month highs of around 1.65%. And the gap between 2-year and 10-year yields – the so-called yield curve – has subsequently widened back to around 125 basis points – 10 bps steeper than a week ago.

Still, all the uncertainty on inflation and economic growth means the mood is sombre on stock markets this morning.

While Asian markets rallied, futures for Wall Street are pointing south and European bourses opening lower.

Investors might cheer up after Wednesday’s set of U.S. earnings, with Tesla especially in focus to see if it can retain its resilience to chip shortages and the Chinese growth slowdown.

And Netflix could be in for gains, having said on Tuesday The Squid Game show had helped it add 4.38 million subscribers from July through September to reach a worldwide total of 213.6 million. In Europe, a a global semiconductor shortage helped ASML to beat Q3 forecasts.

Key developments that should provide more direction to markets on Wednesday:

-China’s new home prices stall for first time since COVID-19

-UK inflation dip unlikely to deter Bank of England from rate hike

-German PPI-Final Euro zone HICP-U.S. 20 year bond auction

-Fed speakers: St. Louis President James Bullard; Atlanta President Raphael Bostic; Chicago President Charles Evans, regulation head Randall Quarles

-Norway Central Bank Governor Oystein Olsen-European earnings: Vivendi, Reckitt Benckiser, ASML, Akso Nebel, Handelsbank, Bankinter, SEB,

-U.S. earnings: Abbott, Verizon, Nasdaq, Northern Trust, Tesla, IBM

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Sujata Rao, editing by Karin Strohecker)

Procter & Gamble Shareholders Head For the Exits

Dow component Procter & Gamble Co. (PG) is trading lower by more than 2% in Tuesday’s pre-market despite beating Q1 2022 top and bottom line estimates. The home and health care giant posted a profit of $1.61 per-share during the quarter, just $0.02 above expectations, while revenue rose a 5.3% year-over-year to $20.34 billion, more than $350 million higher than consensus. The decline confirms the recent failure of September’s breakout above the 2020 peak near 147.

Pandemic Hangover and High Inflation

Revenue is winding down from the 8.5% increase during the same quarter in 2020, when consumers were stocking their shelves in reaction to pandemic disruptions. That marked the strongest growth in years, making 2021 comparisons tough to swallow for sidelined investors. As a result, it isn’t a surprise that 2022 guidance of 3% to 6% revenue growth triggered a sell-the-news reaction even though the company offered the same metrics three months ago.

Inflation is also taking a bite out of profits, with higher production and freight costs reducing earnings-per-share (EPS). In addition, CEO David Taylor is retiring at the end of October, with COO Jon Moeller taking the helm at the start of November. This has added to uncertainty that hasn’t been helped by executive share sales during the quarter, suggesting investors have reached the conclusion this isn’t a good time to buy Procter & Gamble.

Wall Street and Technical Outlook

Wall Street consensus stands at an ‘Overweight’ rating based upon 10 ‘Buy’, 2 ‘Overweight’, 10 ‘Hold’, and 1 ‘Underweight’ recommendation. Price targets range from a low of $139 to a Street-high $167 while the stock is set to open Tuesday’s session on top of the low target. This dismal placement indicates that analysts have failed to calculate the adverse impact of inflation and supply chain disruptions on the 12-month outlook.

Procter & Gamble has been a slow-mover for decades, in line with its defensive reputation. The stock mounted the February 2020 peak at 128.09 in August 2020 and took off in a brief advance that topped out at 146.92 in November. The subsequent decline ended at breakout support in March 2021, yielding a rally that exceeded the prior high by 31 cents in September before turning tail in a decline to the 130s. This rangebound action is likely to continue well into 2022, forcing investors to rely on the 2.41% dividend yield.

For a look at today’s economic events, check out our economic calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication.

Marketmind: Fast and Furious

A look at the day ahead from Sujata Rao

Besides Britain, some are placing bets on a September 2022 Fed rate hike; a month ago, no move was predicted before 2023. Earlier on Tuesday, Australia’s central bank was at pains — again — to stress it did not plan interest rate rises before 2024, yet that hasn’t budge money markets from pricing a late-2022 move.

So, is it justified? Growth is clearly wobbling, especially in China where Q3 GDP slowed to 4.9% while Monday data showed U.S. industrial production shrank 1.3% month-on-month in September.

Inflation is less transitory than anticipated, yet raising rates probably won’t fix the supply-side glitches that are driving up prices and curbing output.

Perhaps that’s why bonds have not built on the recent moves, with yields lower today and the dollar slipping to three-week lows. That’s cheered markets, especially on top of robust earnings so far in the Q3 season and equity futures are implying firmer New York and European sessions, following gains across Asia.

Another piece of good news — Chinese developers Sunac and Kaisa made coupon payments, while Evergrande may also meet an onshore bond coupon due on Tuesday.

What’s ahead today? A raft of Fed and ECB policymakers, another airing for Bank of England governor Andrew Bailey and of course a slew of earnings, including from a FAANG — Netflix.

Key developments that should provide more direction to markets on Tuesday:

-Morrisons investors set to rubber stamp $10 bln CD&R takeover

-UK global investment summit, looking at green finance, technology, life sciences

– Bitcoin a whisker off April 2021 record high

– ECB speakers: Chief economist Philip Lane, board members Fabio Panetta and Frank Elderson

-Fed speakers: San Francisco Fed President Mary Daly; Atlanta Fed President Raphael Bostic; Philadelphia Fed President Patrick Harker

-Bank of England Governor Andrew Bailey

-Emerging markets: Indonesia seen holding rates, Hungary to hike 15 bps

-European earnings: Unilever, Deutsche Boerse

-U.S. earnings: BNY Mellon, Halliburton, Proctor & Gamble, Johnson& Johnson, Netflix

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Sujata Rao; editing by Saikat Chatterjee)

Are Stock Bulls Back On A Track?

Earnings beats have actually been coming in at a wider margin than average, contrary to lingering fears that supply chain disruptions, material shortages, and climbing costs would lead to disappointing Q3 results.

Q3 Earnings

The big beats now have S&P 500 companies on track to post +30% earnings growth for Q3. Most Wall Street insiders are now expecting Q4 earnings to show right around +20% earnings growth.

Today’s earnings highlights include Albertsons and State Street. Some of the big names reporting later this week include Netflix, Haliburton, Johnson & Johnson, United Airlines, and Procter & Gamble on Tuesday; and Biogen, IBM, Verizon, and Tesla on Wednesday; American Airlines, AT&T, Chipotle, Intel, Snapchat, and Southwest Airlines on Thursday.

The following week is even more highly anticipated as many of the biggest names in the stock market will be reporting.

Economic data

In economic data today, Industrial Production for September is expected to dip due to a combination of Hurricane Ida and supply chain constraints. Supply chain challenges also likely lowered builder sentiment in the October NAHB Housing Market Index due today as well. The supply-side shortages of both materials and labor continue to weigh on economic growth outlooks for the last part of 2021.

However, most bullish analysts have adjusted their 2022 growth projections higher, believing lost growth this year will be made up next year. The labor market is expected to get a boost thanks partially to the dramatic decline in Covid cases, which are down nearly -50% since early-September.

The extreme worker shortage in some sectors has already led to rapid wage growth with hourly earnings in September up +4.6%, led by an increase of nearly +11% in leisure and hospitality. That is what’s considered “sticky” inflation, meaning that it is not likely going to be reversed.

Likewise for consumer goods’ prices that have been creeping higher as manufacturers try to offset higher costs. If wage growth can mostly keep pace with inflation, bulls will likely remain less concerned that rising prices will crush economic growth. In fact, Retail Sales released Friday showed no signs of consumer spending slowing down with sales climbing +15% in September, despite obviously higher costs for many goods. The thought of the economy heating back up quickly is both good and somewhat bad.

There now seems to be more talk on Wall Street about the likelihood of two rates hikes next year rather than just one. There’s actually even some talk of perhaps three rate hikes being possible in 2022, especially if the supply-chain complications continue to create higher prices and fuel higher inflation.

The biggest wildcard right now appears to be the global energy shortage which is already pushing up costs for both consumers and manufacturers and threatens to accelerate headline inflation far beyond wage growth.

Any energy “crisis” will likely only be temporary but it still potentially translates to several quarters of slower growth than many Wall Street bulls have been penciling. If it leads to a massive surge higher in inflation in the months ahead, it also could also pressure the Federal Reserve to pull forward its timeline to begin hiking interest rates.

Technical analysis

ES ##-## (Daily) 2021_10_18 (3_38_51 PM)

SP500 futures are testing daily MA50. With the strong accumulation in this market, I will not be surprised to see a base-building above moving average. If that happens, investors will gain more confidence. Thus, we can see money flowing aggressively into the stock market again. The weakness of the USD gives additional strength for indexes. In that case, bulls will target at least 4600 (important Gann level on a daily chart).

Breaking below 4250 is a game-changer. However, in the absence of bearish macroeconomic factors, we have more chances to see a bullish scenario.

Earnings Week Ahead: Steel Dynamics, NetFlix, Tesla, AutoNation and Honeywell in Focus

Earnings Calendar For The Week Of October 18

Monday (October 18)

IN THE SPOTLIGHT: STEEL DYNAMICS, STATE STREET

STEEL DYNAMICS: The U.S-based domestic steel producer and metal recycler is expected to report its third-quarter earnings of $4.62 per share, which represents year-on-year growth of over 800% from $0.51 per share seen in the same period a year ago.

The third-largest producer of carbon steel products in the United States would post revenue growth of over 114% to around $5.0 billion. The company has consistently beaten consensus earnings estimates for the last four quarters.

The company updated its earnings guidance for the third quarter of 2021 in September. For the period, earnings per share (EPS) were expected to be between $4.880-$4.920.

Steel Dynamics is nearing the end of a multi-year investment cycle centered around the construction of a new, state-of-the-art steelmaking mill which comes online in mid-2021, positioning STLD’s FCF generation to increase from 2021 onwards. The company has a proven track record of shareholder returns, and is poised to deliver greater returns for investors, especially through share buybacks,” noted Carlos De Alba, equity analyst at Morgan Stanley.

STATE STREET: The second oldest continually operating United States bank is expected to post third-quarter earnings of $1.92 per share, which represents year-on-year growth of over 30% from $1.45 per share seen in the same period a year ago. The revenue is expected to increase around 6% to $2.95 billion.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE OCTOBER 18

Ticker Company EPS Forecast
STT State Street $1.92
ACI AltaGas Canada $0.45
ELS Equity Lifestyle Properties $0.33
STLD Steel Dynamics $4.62
PACW Pacwest Bancorp $1.03
HXL Hexcel $0.08
SFBS ServisFirst Bancshares $0.96
FNB FNB $0.29
ACKAY Arcelik ADR $0.68
PHG Koninklijke Philips $0.62
ZION Zions Bancorporation $1.36

Tuesday (October 19)

IN THE SPOTLIGHT: NETFLIX, JOHNSON & JOHNSON

NETFLIX: The California-based global internet entertainment service company is expected to report its third-quarter earnings of $2.57 per share, which represents year-over-year growth of over 45% from $1.74 per share seen in the same period a year ago.

The streaming video pioneer would post revenue growth of over 16% to around $7.5 billion. In the last two years, the company has beaten earnings per share (EPS) estimates just thrice with a surprise of nearly 21%.

NetFlix’s better-than-expected third-quarter earnings results could help the stock hit new all-time highs. The company’s shares surged over 17% so far this year and it hit a record high of $646.84 on October 7.

NetFlix (NFLX) stock has emerged from its slump, jumping ~22% in <2 months. Estimates have remained relatively flat and NFLX now trades at 8.5x 2022E Rev, the top of its 3-year range. We expect 3Q net adds of 3.5MM and a 4Q guide of ~7-8MM. Squid Games has demonstrated the impact of a successful international strategy and, if done right, games like Oxenfree could achieve a similar Zeitgest moment. We remain ‘Buy’ rated with a price target of $737, representing 8.5x 2023 JEF Rev,” noted Andrew Uerkwitz, equity analyst at Jefferies.

JOHNSON & JOHNSON: One of the world’s largest and most comprehensive manufacturers of healthcare products is expected to post third-quarter earnings of $2.36 per share, which represents year-on-year growth of over 7% from $2.20 per share seen in the same period a year ago. The revenue to expected to increase over 12% to around $23.6 billion.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE OCTOBER 19

Ticker Company EPS Forecast
FMBI First Midwest Bancorp $0.42
DOV Dover $1.85
SBNY Signature Bank $3.70
MAN ManpowerGroup $1.91
JNJ Johnson & Johnson $2.36
PM Philip Morris International $1.56
BK Bank Of New York Mellon $1.01
TRV Travelers Companies $1.91
ERIC Ericsson $0.17
FITB Fifth Third Bancorp $0.91
SYF Synchrony Financial $1.51
KSU Kansas City Southern $2.09
CBSH Commerce Bancshares $0.98
ONB Old National Bancorp $0.36
AMX America Movil Sab De Cv Amx $6.43
AMOV America Movil Sab De Cv $0.31
FULT Fulton Financial $0.33
NFLX Netflix $2.57
ISRG Intuitive Surgical $1.17
CNI Canadian National Railway USA $1.42
OMC Omnicom $1.37
UAL United Airlines Holdings -$1.51
IBKR Interactive Brokers $0.75
WTFC Wintrust Financial $1.52
WDFC Wd 40 $1.24
UCBI United Community Banks $0.66
HAL Halliburton $0.28
SNV Synovus Financial $1.07
PG Procter & Gamble $1.59
IRDM Iridium Communications -$0.02
RNST Renasant $0.66

Wednesday (October 20)

IN THE SPOTLIGHT: TESLA

TESLA: The California-based electric vehicle and clean energy company is expected to report its third-quarter earnings of $1.52 per share, which represents year-over-year growth of 100% from $0.76 per share seen in the same quarter a year ago.

The high-performance electric vehicle manufacturer would report revenue of $13.16 billion. The electric vehicle producer has beaten earnings three times in the last four quarters.

“We expect Tesla will be upbeat in 3Q21 given record deliveries beating estimates by ~20k announced in early October. Furthermore, the company announced record sales of 56,000 in China with a total of 133,248 or 55% of total deliveries for the quarter coming from their Shanghai facility,” noted Jeffrey Osborne, equity analyst at Cowen.

“We look forward to management’s commentary on Tesla’s internal chip production strategy and capacity expansion plans. We also look forward to an update on the opening of the Berlin Gigafactory. Additionally, we look forward to an update on Tesla’s 4680 cells and the incremental deployment of its beta FSD. Finally, we look forward to an update on the timeline for Semi and Cyber truck release.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE OCTOBER 20

Ticker Company EPS Forecast
ASML ASML $4.61
ABT Abbott $0.94
NEE NextEra Energy $0.73
BIIB Biogen $4.14
NDAQ Nasdaq Omx $1.71
NTRS Northern $1.67
BKR Baker Hughes Co $0.21
MTB M&T Bank $3.50
MKTX MarketAxess $1.46
LAD Lithia Motors $9.24
FHN First Horizon National $0.35
KNX Knight Transportation $1.06
BOKF BOK Financial $1.78
NEP Nextera Energy Partners $0.61
WSO Watsco $3.49
UNF UniFirst $1.81
SCL Stepan $1.42
TSLA Tesla $1.52
CSX CSX $0.38
CCI Crown Castle International $0.77
DFS Discover Financial Services $3.49
PPG PPG Industries $1.59
EFX Equifax $1.73
GGG Graco $0.64
REXR Rexford Industrial Realty $0.12
OMF OneMain Holdings $2.30
FR First Industrial Realty $0.22
THC Tenet Healthcare $1.03
LSTR Landstar System $2.46
SLM SLM $0.18
VMI Valmont Industries $2.49
SLG SL Green Realty -$0.12
LVS Las Vegas Sands -$0.18
SEIC SEI Investments $0.96
GL Globe Life Inc $1.90
TBK Triumph Bancorp $1.08
RUSHA Rush Enterprises $0.98
RLI RLI $0.59
UMPQ Umpqua $0.44
CNS Cohen & Steers $0.89
FTI FMC Technologies $0.02
TCBI Texas Capital Bancshares $1.10
STL Sterling Bancorp $0.52
ANTM Anthem $6.39
LRCX Lam Research $8.23
IBM IBM $2.53
KMI Kinder Morgan $0.24
URI United Rentals $6.84
CFG Citizens Financial $1.15
CMA Comerica $1.64
EXPO Exponent $0.40
MTG MGIC Investment $0.44
WGO Winnebago Industries $1.96
CVBF CVB Financial $0.37
CP Canadian Pacific Railway USA $0.93
MSM MSC Industrial Direct $1.27
UFPI Universal Forest Products $1.55
FCFS FirstCash $0.81
SNBR Scs Group Plc $1.43

Thursday (October 21)

IN THE SPOTLIGHT: AUTONATION

The Fort Lauderdale-based automotive retailer AutoNation is expected to report its third-quarter earnings of $4.16 per share, which represents year-over-year growth of about 75% from $2.38 per share seen in the same period a year ago.

In the last four consecutive quarters, on average, the company has delivered an earnings surprise of over 47%. The automotive retail giant would post revenue of $6.5 billion.

“We are optimistic about the trajectory for new CEO, Mike Manley, previously in various leadership roles at FCA and Stellantis where he demonstrated leadership of highly complex organizations going through transformation changes in scale, scope and technology,” noted Adam Jonas, equity analyst at Morgan Stanley.

“Omni-channel strategy unclear and may result in loss of share. For New Vehicles, historically, market share & gross profit per unit have declined. For Used Vehicles, the standalone used car business model was unsuccessful in the late 1990s. The business mix/growth/margins are similar to the other traditional auto dealers, and the stock trades at a discount to its historical average and vs the dealer average.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE OCTOBER 21

Ticker Company EPS Forecast
CROX Crocs $1.84
IQV IQVIA Holdings Inc $2.12
WAL Western Alliance Bancorporation $2.23
PSMT PriceSmart $0.73
SIVB SVB Financial $5.53
OZK Bank Ozk $0.97
CE Celanese $4.73
FFBC First Financial Bancorp $0.52
INTC Intel $1.11
TPH Tri Pointe Homes $0.91
OLN Olin $1.98
WRB W.R. Berkley $0.95
CSL Carlisle Companies $2.75
SNAP Snap -$0.10
MAT Mattel $0.72
VICR Vicor $0.46
CMG Chipotle Mexican Grill $6.30
ASB Associated Banc $0.44
INDB Independent Bank $1.02
GBCI Glacier Bancorp $0.71
SAP SAP $1.68
LUV Southwest Airlines -$0.27
VLO Valero Energy $0.86
WHR Whirlpool $6.11
PBCT People’s United Financial $0.33
AAL American Airlines -$1.09
FCX Freeport-McMoran $0.82
ALK Alaska Air $1.05
GPC Genuine Parts $1.64
AN AutoNation $4.16
SASR Sandy Spring Bancorp $1.09
ABB ABB $0.37
BCS Barclays $0.37
ATLCY Atlas Copco ADR $0.47
DHR Danaher $2.14
FAF First American Financial $1.82
BKU BankUnited $0.87
MMC Marsh & McLennan Companies $1.00
IPG Interpublic Of Companies $0.49
T AT&T $0.78
ALLY Ally Financial $1.95
WBS Webster Financial $1.08
NUE Nucor $6.93
UNP Union Pacific $2.49
EEFT Euronet Worldwide $1.42
TRN Trinity Industries $0.18
SAFE 3 Sixty Risk $0.35
GATX GATX Corp $1.07
KEY KEY $0.56
RCI Rogers Communications USA $0.81
PPBI Pacific Premier Bancorp $0.82
EWBC East West Bancorp $1.51
BX Blackstone $0.89
POOL Pool $3.85
DGX Quest Diagnostics $2.71
ALLE Allegion $1.30
HOMB Home Bancshares $0.44
TSCO Tractor Supply $1.64
SNA Snap-On $3.37
SON Sonoco Products $0.90
WSFS Wsfs Financial $0.88
RHI Robert Half International $1.40

Friday (October 22)

IN THE SPOTLIGHT: HONEYWELL INTERNATIONAL

The company which manufactures parts for planes made by Boeing and Airbus SE, Honeywell, is expected to report its third-quarter earnings of $1.99 per share, which represents year-over-year growth of about 28% from $1.56 per share seen in the same quarter a year ago.

In the last four consecutive quarters, on average, the company has delivered an earnings surprise of about 5%. The Charlotte, North Carolina-based company would post revenue growth of about 12% to $8.7 billion.

Last week, the company lifted its guidance for business jet deliveries and said the industry has almost completely shaken off the effects of the COVID-19 pandemic.

The worldwide technology and manufacturing company in its 30th annual Global Business Aviation Outlook forecasts up to 7,400 new business jet deliveries worth $238 billion from 2022 to 2031, up 1% in deliveries from the same 10-year forecast a year ago.

“We think that Honeywell (HON) stock currently is a better pick compared to Rockwell Automation stock, despite Rockwell’s revenue growing at a faster pace over the recent years. Honeywell trades at about 4.4xtrailing revenues, compared to 5.1x for Rockwell. Although both the companies saw a decline in revenue due to the pandemic, Rockwell has seen a sharp recovery aided by new orders and impact of ASEM, Kalypso, and Fiix acquisitions,” noted equity analysts at TREFIS.

Honeywell, on the other hand, is still seeing slower revenue growth, primarily due to its exposure to the aerospace segment, which was one of the worst-hit businesses during the pandemic. However, there is more to the comparison. Let’s step back to look at the fuller picture of the relative valuation of the two companies by looking at historical revenue growth as well as operating margin growth.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE OCTOBER 22

Ticker Company EPS Forecast
VFC VF $1.16
GNTX Gentex $0.40
SAM Boston Beer $4.26
IHG Intercontinental Hotels $0.20
ALV Autoliv $0.82
AXP American Express $1.76
SLB Schlumberger $0.35
ROP Roper Industries $3.83
HCA HCA $3.96
CLF Cliffs Natural Resources $2.21
HON Honeywell International $1.99
RF Regions Financial $0.53
STX Seagate Technology $2.21
AIMC Altra Industrial Motion $0.82

 

Stocks, Yields Slip as Investors Await Next Catalyst

The number of Americans filing new claims for unemployment benefits fell to a 16-month low last week as the U.S. labor market steadily gains traction while other data showed import prices rose solidly in June but have probably peaked.

Wall Street traded lower even as the four largest U.S. consumer banks posted blockbuster second-quarter results earlier this week that were above analysts’ estimates.

Investors are looking for visibility into future earnings as stocks have already surged in anticipation of stellar growth.

“We had the rally going into the earnings season. Now that we’re actually here, we’re seeing some softness. I wouldn’t be surprised if we don’t see a lot of strength during this reporting season,” said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York.

Analysts expect strong earnings, with IBES data from Refinitiv showing consensus looking for a 65.8% gain from a year ago, making corporate guidance more important than results.

‘NAME OF THE GAME’

Energy and technology stocks led the decline on Wall Street, with defensive consumer staples and utilities the only two of 11 S&P 500 sectors to gain. Staples have pricing power that could help Procter & Gamble Co, Coca-Cola Co and others rise, once it is clear their margins remain intact, said Tom Hayes, founder and managing member of Great Hill Capital LLC.

“Guidance is the name of the game. A lot of good news is already baked into the market and even with strong guidance, you may get a breather here,” Hayes said.

The MSCI world equity index, which tracks shares in 50 countries, closed down 0.33% to 723.66 after touching a record high on Wednesday. Europe’s broad FTSEurofirst 300 index closed down 0.92% at 1,761.30, less than 20 points from an all-time peak set Monday.

Losses in Europe were broad-based, with economically sensitive stocks such as banks, automakers and travel down between 0.3% and 1.6% as investors grew wary of rising COVID-19 cases and their potential economic impact.

Official data showed that the United Kingdom reported the highest daily increase in COVID-19 cases since Jan. 15.

On Wall Street, the Dow Jones Industrial Average eked out a 0.15% gain but the S&P 500 fell 0.33% and the Nasdaq Composite slid 0.70%.

Shares in emerging markets rose, bucking the global trend, with MSCI’s index gaining 0.77%.

The 10-year Treasury note fell 5.9 basis points to yield 1.2972%, while the dollar index, which tracks a basket of six currencies, rose 0.19% to 92.586.

The rally in U.S. and European bond prices, which show the inverse of yields, suggested growing investor caution.

The dollar has climbed in recent weeks as investors take stock of the Fed’s increasingly upbeat assessment of the U.S. economy, which for some investors has brought forward the timeframe for its next rate rise. Rates have fallen on Japanese buying and investors selling long-dated maturities for shorter-duration government debt, which has pushed prices up.

The euro fell 0.21% at $1.1810, while the yen traded slid 0.18% at $109.7900.

Oil prices fell as investors braced for increased supplies after a compromise agreement between leading OPEC producers and after a surprisingly low weekly reading on U.S. fuel demand.

Brent crude fell $1.29 to settle at $73.47 a barrel, while U.S. crude slid $1.48 to $71.65 a barrel.

Gold hit a one-month peak, spurred by Federal Reserve Chair Jerome Powell’s dovish comments that squashed market interest rates.

U.S. gold futures gained 0.3% to $1,830.00 an ounce.

COVID-19 VARIANT FEARS

China’s economic data showed average growth surpassed the first quarter, while June retail sales and industrial output beat expectations. But it also showed authorities, which only last week injected 1 trillion yuan into the financial system, will ensure that conditions stay loose.

The World Health Organization (WHO) COVID-19 dashboard reported the first weekly rise in global deaths from the virus in 10 weeks and a 5.6% jump in daily case numbers on Wednesday.

“The market is fearing the Delta variant could take a hold of different economies so you are almost seeing that we are back to the ‘bond yields lower, tech doing well’ scenario,” said Justin Onuekwusi, portfolio manager at Legal & General Investment Management.

The likes of Amazon and Google are up 6-8% this month, while China’s biggest tech firms Alibaba and Tencent have surged more than 12% since China’s central bank made a supportive policy tweak for the first time in nearly a year on Friday.

The Chinese yuan dipped to 6.4628 per dollar in Asia after hitting a three-week high of 6.4508 overnight.

For a look at all of today’s economic events, check out our economic calendar.

(Additional reporting by Sujata Rao; Editing by Will Dunham, Alex Richardson, Barbara Lewis and Gareth Jones)

Procter & Gamble Raises FY2021 Guidance; Stock Has 20% Upside Potential

Procter & Gamble, the world’s largest maker of consumer packaged goods, reported better-than-expected earnings in the fiscal second quarter and said it has raised its outlook for fiscal 2021 all-in sales growth to a range of 5-6% from the previous forecast of 3-5%.

Cincinnati, Ohio-based consumer goods corporation said its net sales rose 8% to $19.7 billion in the second quarter fiscal year 2021. Diluted net earnings per share increased 4% to were $1.47 and Core-EPS surged 15% to $1.64, beating the Wall Street consensus estimate of $1.51 per share.

Procter & Gamble raised its outlook for organic sales growth to a range of 5-6% from 4-5%. The Company said it now expects fiscal 2021 GAAP diluted net earnings per share growth in the range of 8-10% from fiscal 2020 GAAP EPS of $4.96. In addition, P&G upgraded their guidance for core earnings per share growth to a range of 8-10% from 5-8% versus fiscal 2020 core EPS of $5.12.

Procter & Gamble’s (PG) strong quarter should lift shares, improve sentiment for (lagging) HPC group -stock remains a Franchise Pick. We are focused on a “stronger for longer” theme in HPC w/ ’21 a transition year as the public gradually overcomes its trepidation toward the vaccine, though certain consumer behaviours sustain (cleaning, health & wellness, etc.), which should benefit PG and the group,” noted Kevin Grundy, equity analyst at Jefferies.

“At 22x P/E, PG (and our “core” HPC / beverages basket) are near relative lows vs. the S&P 500 last seen during the 08-09 downturn, leaving risk-rewards skewed to the upside. PG’s strong quarter should drive shares higher and offers a positive read-through for the group as Procter kicks off earnings season.”

However, Procter & Gamble shares traded 1.2% lower at $132.0 on Wednesday; the stock rose over 11% in 2020.

Procter & Gamble Stock Price Forecast

Twelve analysts who offered stock ratings for Procter & Gamble in the last three months forecast the average price in 12 months at $157.00 with a high forecast of $169.00 and a low forecast of $130.00.

The average price target represents an 18.82% increase from the last price of $132.14. From those 12 analysts, eight rated “Buy”, four rated “Hold” and none rated “Sell”, according to Tipranks.

Morgan Stanley gave a base target price of $165 with a high of $184 under a bull scenario and $103 under the worst-case scenario. The firm currently has an “Overweight” rating on the consumer goods corporation’s stock.

Several other analysts have also recently commented on the stock. JP Morgan lowered the target price to $159 from $163. Jefferies decreased the price objective to $168 from $169. Smith Barney Citigroup boosted their price objective to $165 from $159.

In addition, Truist boosted their price objective to $150 from $125. Wells Fargo & Company set an “overweight” rating and a $160.00 price objective for the company.

Equity Analyst’s View

“We expect a positive reaction to a strong FQ2 with a 2.5% top-line and 10.8% operating profit beat vs consensus, driven by strong 8% organic sales growth and an 80-bps gross margin beat vs consensus. Importantly, each segment organic sales growth was 5% or above, giving us greater confidence that PG momentum can continue going forward, as results were not narrowly driven by any one segment benefitting from COVID-19 demand. PG essentially flowed through almost all of Q2 EPS upside vs consensus to FY21 EPS guidance, which moved up by 250 bps at its midpoint, but we still view as overly conservative,” said Dara Mohsenian, equity analyst at Morgan Stanley.

“We believe strategy tweaks can sustain PG long-term top-line growth in the 4% range. In the US, a strong breadth of performance and share gains give us confidence that market share momentum is sustainable and supports long-term top-line growth above HPC peers. We see continued GM expansion with moderate commodity headwinds and a solid competitive environment. PG trades at 23x CY22e EPS, a discount to HPC peers CLX, CL and CHD, and looks compelling given our call for higher long-term PG growth.”

Check out FX Empire’s earnings calendar

Earnings to Watch Next Week: Logitech, Goldman Sachs, NetFlix and IBM in Focus

Next week’s earnings are of much significance for major market movements as 2021 is believed to be a year of recovery on hopes of successful roll-out of the COVID-19 vaccine.

Earnings Calendar For The Week Of January 18

Monday (January 18)

IN THE SPOTLIGHT: LOGITECH INTERNATIONAL

Logitech International S.A., a Swiss-American manufacturer of computer peripherals and software, is expected to report a profit of $1.08 in the fiscal third quarter, which represents year-over-year growth of about 29% from the same quarter last year when the company reported 84 cents per share.

The Lausanne-based company’s revenue to grow over 35% year-over-year to $1.23 billion from $902.69 million in the same period last year.

“We are bullish into Logitech‘s F3Q21 earnings report next week as our December quarter checks point to a better than the expected market environment, most notably for PC peripherals. We’d be buyers into the print and raise our PT to $113 (from $106) to account for recent peer multiple expansion,” noted Erik Woodring, equity analyst at Morgan Stanley.

Tuesday (January 19)

IN THE SPOTLIGHT: GOLDMAN SACHS, NETFLIX

GOLDMAN SACHS: New York-based leading global investment bank is expected to report a profit of $7.33 in the fourth quarter, which represents year-over-year growth of about 56% from the same quarter last year when the company reported $4.69 per share. The bank’s revenue is expected to dip 4.9% from the year-ago quarter to $9.47 billion.

“As market volatility and the urgency around capital raising activity (both equity and debt) subside in 2021, we expect total revenues decline 11% y/y from a strong 2020. We are valuing the group on normalized 2023 EPS. While we still see 15%+ upside to Goldman Sachs (GS) based on this methodology, we see even more upside elsewhere in the group, particularly in consumer finance stocks which have been under more pressure,” said Betsy Graseck, equity analyst at Morgan Stanley.

“This drives our Underweight rating. Over time, we expect GS can drive some multiple expansion as management executes on its multi-year strategic shift towards higher recurring revenues.”

NETFLIX: California-based global internet entertainment service company is expected to report a profit of $1.35 in the fourth quarter, which represents year-over-year growth of about 4% from the same quarter last year when the company reported $1.30 per share. The streaming video pioneer’s revenue is expected to surge over 20% from the year-ago quarter to $6.60 billion.

“We expect paid net adds to come in the above guide, helped by ongoing shutdowns & seasonal strength. Our view is supported by our positive proprietary 4Q20 survey data, which implies rising pricing power into year-end. We tweaked estimate’s & introduced ’21 quarters; in turn, our DCF-based price target rises to $650 from $625 prior; reiterate ‘Outperform’ rating,” said John Blackledge, equity analyst at Cowen and company.

NetFlix (NFLX) shares were +67% in ’20 alongside a pandemic surge, following massive sub beats in 1Q / 2Q respectively and 28.1MM total paid net adds in 1Q-3Q ’20, up 47% y/y. With consumers staying home amid colder weather & limited social activities, we expect Netflix engagement to remain high; meanwhile, to the extent, there is any NT pressure on UCAN paid subs from the 4Q US price increase, we would consider this a buying opportunity for NFLX shares as the co. grows the value prop alongside rising ARPU.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE JANUARY 19

Ticker Company EPS Forecast
PACW Pacwest Bancorp $0.67
CMA Comerica $1.18
ONB Old National Bancorp $0.38
SCHW Charles Schwab $0.65
GS Goldman Sachs $7.33
STT State Street $1.57
HAL Halliburton $0.15
FULT Fulton Financial $0.27
JBHT J B Hunt Transport Services $1.30
ZION Zions Bancorporation $1.01
PNFP Pinnacle Financial Partners $1.36
FNB FNB $0.24
UCBI United Community Banks $0.60
NFLX Netflix $1.35
IBKR Interactive Brokers $0.58
RNST Renasant $0.59
SBNY Signature Bank $2.91

Wednesday (January 20)

IN THE SPOTLIGHT: UNITEDHEALTH

UNITEDHEALTH: Minnesota-based health insurance and health care data analysis giant is expected to report a profit of $2.41 in the fourth quarter, which represents a year-over-year decline of about 40% from the same quarter last year when the company reported $3.90 per share.

The largest insurance company by Net Premiums is witnessing a slowdown in its international business as increased joblessness due to the COVID-19 pandemic has dented demand for commercial membership.

UnitedHealth Group is the number one Medicare Advantage player with 28% market share, the number two Medicare PDP player with 20% market share, and the number two commercial player with 15% market share. United’s model is enhanced via vertical integration with its OptumRx PBM platform, which is one of the three largest PBMs in the country,” wrote Ricky Goldwasser, equity analyst at Morgan Stanley.

“With a large lead in the breadth of services offerings and considerable exposure to government businesses, UnitedHealth is well-positioned for any potential changes in the US healthcare system. A strong balance sheet and continued solid cash generation give flexibility for continued M&A.”

United Airlines is expected to report a deep loss in the fourth quarter due to the COIVD-19 pandemic, which harmed demand for travel.

Ohio-based Tide detergent and Pampers diaper manufacturer Procter & Gamble is expected to report an increase in profits on rising demand for home care and laundry products amid the COIVD-19 pandemic.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE JANUARY 20

Ticker Company EPS Forecast
UNH UnitedHealth $2.41
PG Procter & Gamble $1.51
ASML Asml $2.96
MS Morgan Stanley $1.30
USB US Bancorp $0.95
BK Bank Of New York Mellon $0.88
FAST Fastenal $0.33
CFG Citizens Financial $0.91
CBSH Commerce Bancshares $0.92
BOKF BOK Financial $1.92
FCEL Fuelcell Energy -$0.07
KMI Kinder Morgan $0.24
DFS Discover Financial Services $2.36
UAL United Airlines Holdings -$6.56
AA Alcoa $0.09
WTFC Wintrust Financial $1.41
UMPQ Umpqua $0.48
HWC Hancock Whitney Corp $0.90
PLXS Plexus $1.10
STL Sterling Bancorp $0.46
PTC PTC $0.65

Thursday (January 21)

IN THE SPOTLIGHT: IBM

IBM: Armonk, New York-based technology and consulting company is expected to report a profit of $1.81 in the fourth quarter, which represents a year-over-year decline of over 60% from the same quarter last year when the company reported $4.71 per share.

“For 2020, IBM refrained from providing any guidance, citing business uncertainty. Nevertheless, management stated that the fourth quarter is a seasonally strong quarter. The company is witnessing robust pipelines across hybrid cloud and data platform, AI solutions, in Cognitive Apps business driven by strength in Cloud Paks and Security, cloud-based transformation services in GBS segment, and App modernization offerings,” noted analysts at ZACKS Research.

“Also, management is banking on advancement in Red Hat “actual backlog growth.” Moreover, gains from the rapid uptake of IBM z15 is anticipated to be a tailwind. The company also anticipates to end 2020 with reduced debt levels.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE JANUARY 21

Ticker Company EPS Forecast
UNP Union Pacific $2.24
TFC Truist Financial Corp $0.85
TAL TAL International $0.04
TRV Travelers Companies $3.16
BKR Baker Hughes Co $0.17
FITB Fifth Third Bancorp $0.68
NTRS Northern $1.49
MTB M&T Bank $3.02
KEY KEY $0.43
CTXS Citrix Systems $1.34
HOMB Home Bancshares $0.39
INDB Independent Bank $1.02
FBC Flagstar Bancorp $2.36
WBS Webster Financial $0.75
BKU BankUnited $0.71
WNS Wns Holdings $0.59
INTC Intel $1.10
IBM IBM $1.81
ISRG Intuitive Surgical $3.09
CSX CSX $1.01
PPG PPG Industries $1.58
SIVB SVB Financial $3.79
TCBI Texas Capital Bancshares $1.13
ASB Associated Banc $0.30
PBCT People’s United Financial $0.32
OZK Bank Ozk $0.78
WAL Western Alliance Bancorporation $1.33
BKRKY Bank Rakyat $0.17
MTCH Match Group $0.50
MTG MGIC Investment $0.37
STX Seagate Technology $1.13

Friday (January 22)

Ticker Company EPS Forecast
EDU New Oriental Education Tech $0.26
ABBV AbbVie $2.86
HON Honeywell International $2.00
SLB Schlumberger $0.17
KSU Kansas City Southern $1.93
RF Regions Financial $0.42
HBAN Huntington Bancshares $0.29
ALLY Ally Financial $1.05
FHN First Horizon National $0.28
HRC Hill-Rom $1.05
NEP Nextera Energy Partners $0.39
IBN Icici $0.14
TOP Topdanmark A/S kr3.63

 

Procter & Gamble Sales Jump 9%, Revises Forecast; Target Price $166 in Best Case

Procter & Gamble Co, an American multinational consumer goods corporation, reported its net sales rose 9% year-on-year to $19.3 billion in the first quarter fiscal year 2021 and raised its full-year sales and earnings forecast, sending its shares up over 1.2% on Tuesday.

The company which manufactures and sells consumer goods in over 180 countries said its diluted net earnings per share rose 20% to $1.63 from a year earlier. That was largely driven by increases in consumer demand for home cleaning products during the COVID-19 pandemic

“Another strong quarter through a difficult environment – Procter & Gamble (P&G) remains a stock to own through the recession: Despite the challenging macroeconomic backdrop, P&G delivered a solid quarter, including +9% organic sales, GM % upside, and increased FY21 org sales and EPS guidance,” said Kevin Grundy, equity analyst at Jefferies.

“We view the co.’s FY21 EPS guidance as conservative and continue to see upside to Street estimates with (under-appreciated) structurally higher long-term growth (notably health, hygiene, cleaning, home care) likely to drive further multiple expansion for the stock. Our $166 price target is based on 27x P/E and 28x EV/ULFCF.”

The maker of Tide and Ariel detergent raised its outlook for fiscal 2021 all-in sales growth to a range of 3%-4% from a range of 1%-3% versus the prior fiscal year. The revised range includes an estimated 1% negative impact from foreign exchange.

The company raised its outlook for organic sales growth to a range of 4%-5% from a range of 2%-4%. P&G raised guidance for core earnings per share growth from a range of 3%-7% to a range of 5%-8% versus fiscal 2020 core EPS of $5.12.

At the time of writing, Procter & Gamble shares traded 1.26% higher at $143.7 on Tuesday; the stock is up about 15% so far this year.

Executive comments

“We delivered another strong quarter of organic sales growth, core earnings per share and cash returned to shareowners, enabling us to increase our outlook for fiscal year results,” said David Taylor, Chairman, President and Chief Executive Officer.

“Our near-term priorities continue to be employee health and safety, maximizing the availability of P&G products for consumers around the world, and helping society meet the challenges of the COVID-19 crisis. We remain firmly focused on executing our strategies of superiority, productivity, constructive disruption and improving P&G’s organization and culture to deliver balanced top-line and bottom-line growth along with strong cash generation.”

Procter & Gamble Stock Price Forecast

Twelve analysts forecast the average price in 12 months at $146.92 with a high forecast of $166.00 and a low forecast of $128.00. The average price target represents a 2.26% increase from the last price of $143.68. From those 12 equity analysts, eight rated “Buy”, four rated “Hold” and none rated “Sell”, according to Tipranks.

Morgan Stanley gave a base target price of $158 with a high of $177 under a bull scenario and $99 under the worst-case scenario. Truist securities raised their stock price forecast to $150 from $125; Berenberg upped their target price to $149 from $136; BofA Global Research upgraded the price objective to $158 from $153.

Several other analysts have also recently commented on the stock. The Procter & Gamble had its price objective boosted by Jefferies Financial Group to $166 from $153. Jefferies Financial Group currently has a ‘buy’ rating on the stock. Deutsche Bank Aktiengesellschaft raised their target price to $150 from $145 and gave the stock a buy rating.

Analyst Comments

“We are ‘Overweight’ Procter & Gamble. We believe strategy tweaks can sustain Procter & Gamble long-term topline growth in the 4% range. In the U.S., a strong breadth of performance and share gains give us confidence that market share momentum is sustainable and supports LT topline growth above HPC peers. We see continued GM expansion with moderate commodity headwinds and a solid competitive environment,” said Dara Mohsenian, equity analyst at Morgan Stanley.

“PG trades at 23x CY22e EPS, a discount to HPC peers CLX, CL and CHD, and looks compelling given our call for higher LT PG growth.”

Upside and Downside Risks

Upside: Favorable pricing environment, cost-cutting upside, higher market share gains in key categories, COVID-19 related pantry loading tailwinds, and moderate currency & commodity – highlighted by Morgan Stanley.

Downside: Macro pressures, unfavourable pricing environment, market share losses from competition, currency & commodity pressures.

Check out FX Empire’s earnings calendar

Procter & Gamble Breaks Out To All Time-High

Dow component Procter & Gamble Co. (PG) broke out to an all-time high last week after beating top and bottom line Q4 2020 estimates and guiding fiscal year 2021 earnings-per-share (EPS) above consensus. The household goods giant reported a profit of $1.16 per-share on a 3.5% year-over-year revenue increase to $17.7 billion, underpinned by strong demand for household cleaning, personal health, and cleansing products in the U.S.A. and China.

Procter & Gamble Higher Sales Due To Pandemic

Organic sales rose 6% during the quarter, with the home care segment that includes Tide and Comet cleaning products reporting impressive 14% year-over-year growth. Procter & Gamble’s health care segment lagged badly, booking sales of just 2% after Crest and Oral-B products generated limp growth as a result of retail, electronic, and dental office closures. The company also noted single-digit declines in Gillette and Venus products, insisting that many customers are shaving less often as a result of the pandemic.

CEO David Taylor discussed strong tailwinds in a post-release interview, predicting “there may be a long-term increase focused on the home — more time at home, more meals at home — with related consumption impacts.” However, COO Jon Moeller followed up Taylor’s upbeat commentary, warning the pandemic will dictate trends in the next two years, stating “we’ll likely be operating without a vaccine or advanced therapeutics through fiscal 2021”.

Wall Street And Technical Outlook

Wall Street consensus rates the stock as a ‘Moderate Buy’ based upon 8 ‘Buy’ and 3 ‘Hold’ rankings. No analysts are recommending that shareholders sell their positions and move to the sidelines at this time.  Price targets currently range from a low of $125 to a street-high $153 while the stock has opened Wednesday’s U.S. session about $8 below the median $142 target. This placement suggests that additional gains are likely in coming weeks.

Proctor & Gamble is trading at an all-time high in the 130s after breaking out above the February 2020 high. However, accumulation readings have failed to match bullish price action and are slumping just above the midpoint of the major distribution wave posted between February and June.  In turn, this predicts the rally will stall soon and ease into a holding pattern that tests new support before yielding sizable upside, or a failed breakout.