Week In Review: Procter & Gamble, Unilever, Colgate-Palmolive And Kimberly-Clark

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Procter & Gamble

Consumer Goods stocks had a mixed performance last week, with domestic U.S. players such as Procter & Gamble (NYSE:PG), Colgate-Palmolive (NYSE:CL) and Kimberly-Clark Corp. (NYSE:KMB) posting some gains from Monday, September 22 through Friday, September 26. U.S. consumer goods companies such as P&G, Colgate and Kimberly-Clark gained on Wednesday, September 24, after new home sales for August jumped 18%, the fastest since May 2008, signalling an improvement in consumer spending potential.

However, the Anglo-Dutch Consumer Goods major Unilever (NYSE:UL) declined 1.3% during this period, on the back of a broader market contraction on oil concerns in the European Union. The FTSE 100, of which Unilever is a constituent, declined 2.7% during the same period. Comparatively, the S&P 500, which includes P&G, Colgate and Kimberly-Clark as constituents, declined 1.4% this week.

Below, we cover key events from the past week for the above listed Consumer Goods companies.

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Procter & Gamble

Shares of P&G started the week on a flat note and rose higher on the back of a rising market Wednesday, September 24. However, shares fell along with the market Thursday, September 25, shedding their gains through the week. Year-to-date, shares of P&G have posted marginal gains, with quarterly results weighed down by sluggish sales growth, particularly in the U.S. market. However, prudent cost savings programs have lent buoyancy to shares despite weak top line numbers.

We have a price estimate of $70 for Procter & Gamble, about 17% lower than its current market price of $84. Our full CY14 revenue estimate stands at approximately $84.7 billion, compared to a consensus FY15 estimate of $84.7 billion.

Unilever

Shares of Unilever declined the most among the four consumer goods companies. The weakness in Unilever’s shares continued after the company warned of slowing sales for the second half of 2014 on September 17. Additionally, macroeconomic factors from the European Union weighed on American listed ADRs this week, following oil concerns from the Russia-Ukraine fiasco. Year-to-date, Unilever’s shares fared similar to P&G shares, with sluggish top line performance offset by prudent cost savings to maintain earnings quality.

We have a price estimate of $47 for Unilever, about 12% higher than its current market price of $42. Our full FY14 revenue estimate stands at approximately $68.1 billion, compared to a consensus estimate of $66.68 billion. We expect non-GAAP earnings per share of $2.14 this fiscal year, compared to consensus estimates of $2.20.

Colgate-Palmolive

Colgate’s shares started flat this week and gained about 1.3% on Wednesday. However, shares pared down these gains on Thursday as part of a broader market contraction. The company recent quarterly earnings were a miss on revenues, and shares have remained subdued post these quarterly results on July 31,2014. Year-to-date, Colgate’s shares have remained flat.

We have a price estimate of $65 for Colgate-Palmolive, in line with its current market price. Our full FY14 revenue estimate stands at approximately $18.2 billion, compared to a consensus estimate of $17.6 billion. We expect non-GAAP earnings per share of $3.13 this fiscal year, compared to consensus estimates of $2.97.

Kimberly-Clark

Shares of Kimberly-Clark trended similar to the other consumer goods stocks, starting the week flat before gaining Wednesday, September 24 and declining Thursday, September 25. Year-to-date performance from Kimberly-Clark was relatively lack-luster, weighed down by sluggish domestic sales despite strong sales growth from International markets.

We have a price estimate of $112 for Kimberly-Clark, 4% ahead of its current market price of $107. Our full FY14 revenue estimate stands at approximately $21.7 billion, compared to a consensus estimate of $21.4 billion. We expect non-GAAP earnings per share of $5.93 this fiscal year, compared to consensus estimates of $6.09.

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