The Procter & Gamble (PG) stock price has been under pressure in the past few days as investors wait for the company’s quarterly results scheduled for Wednesday. The stock is trading at $142.34, which is about 2% below the highest level on Friday.
Procter & Gamble earnings
PG is one of the biggest sellers of fast-moving consumer products in the world. The company sells some of the best-known brands like Always, Pampers, and Dove.
The PG stock price has had a relatively mild year as investors price in strong recovery but the high cost of doing business. In total, the shares have risen by about 5% year-to-date, but they are about 18% above the lowest level this year. This performance has been weaker than that of the S&P 500 and other leading indices.
The company will publish its third-quarter results on Wednesday. These results are expected to show that the company’s revenue did well in the quarter.
Precisely, data compiled by SeekingAlpha shows that analysts expect that the firm’s revenue jumped to $19.5 billion in its FQ1 2022. This will be a strong performance since the company made more than $18.95 billion in the previous quarter.
It will also be higher than the $19.32 billion that the company made in the same quarter in 2020. Still, judging by history, the company will do better than estimates. It has beaten analysts’ forecasts in the past six straight quarters.
The company is also expected to boost its profitability. The earnings per share figure is expected to rise from $1.13 in the second quarter to $1.59.
Supply chain challenges
Still, analysts will mostly be focusing on the company’s cost structure. As a leading global manufacturer, the company is highly exposed to the ongoing supply-chain challenges and higher costs. Indeed, in the most recent earnings release, the company said that its costs would increase by about $1.9 billion.
The situation could be even worse since the supply chain woes are worsening. For example, many ports are seeing a backlog of orders. And last week, Dubai Airport said that it will pause its cargo section as it deals with the backlog.
At the same time, the prices of key commodities that P&G uses in its operations have risen. For example, the price of cotton has surged to the highest level in a decade.
P&G has made plans to offset some of these costs by raising prices. It boosted prices of key products in September, and the situation will likely continue.
Is P&G stock a buy?
Analysts have increasingly turned bullish on the PG stock price. Early this month, analysts at Bank of America boosted its stock estimate, citing the company’s strong organic growth. Similarly, those at JPMorgan have also sounded bullish, while those at Morgan Stanley have added it to their high conviction list.
Analysts at Deutsche Bank, Evercore ISI, and Morgan Stanley expect that the stock will jump to more than $160.
Procter & Gamble stock price forecast
The daily chart shows that the PG stock price has been in a bullish trend in the past few months. This bullish trend, however, is losing momentum as investors worry about the rising costs. As a result, the shares have declined by about 3.30% from the highest level in October.
It has also moved to the 25-day and 50-day moving average while the MACD is attempting to move above the neutral level. Therefore, the shares will likely retreat below the chin of the double-top at $138 after earnings. In the long term, the stock could resume the bullish trend.
