RobsonPL/iStock Editorial via Getty Images A Quick Check-In On The Thesis Procter & Gamble ( PG ) stock has barely moved since it reported earnings on April 24 , currently trading at $144.37, although the stock fell roughly 11% from February 27 until the earnings release . To me, that small reaction tells a lot about how the company is doing. Using FactSet estimates, Core EPS was $1.59 against a $...
RobsonPL/iStock Editorial via Getty Images A Quick Check-In On The Thesis Procter & Gamble ( PG ) stock has barely moved since it reported earnings on April 24 , currently trading at $144.37, although the stock fell roughly 11% from February 27 until the earnings release . To me, that small reaction tells a lot about how the company is doing. Using FactSet estimates, Core EPS was $1.59 against a $1.56 estimate, and organic sales grew 3% when the market only expected 1.7%, which is a clear beat. But the stock didn't really go anywhere, and the reason is that while organic growth came in above expectations, gross and operating margins came in below. So the market got the good revenue news it wanted, but at the same time got a margin disappointment that canceled it out. SA The Headline Growth Looks Better Than The Underlying Story Net sales grew 7% YoY, but breaking it apart, the story changes. The 10-Q shows that 4 of those 7 points came from favorable foreign exchange, while volume added 2 points and pricing added only 1. Because currency is not something a company can control, and it can change from a tailwind to a headwind very fast if the dollar strengthens, it's something that we should not take into consideration, in my opinion. So the growth that actually came from the business, selling more units and charging a bit more, was around 3%. That is not bad for a company this size, but it is a long way from the 7% headline. P&G is not growing as fast as it looks like. One thing that got my attention this quarter was beauty on the top line. The 10-Q shows beauty sales rose 11% to $3.9B, and the company's own organic reconciliation puts organic growth at 7%, which is strong. Hair care and personal care both grew double digits, and skin care grew high single digits, so the growth was broad in sales terms. I think beauty matters because it includes premium categories and brands like SK-II, Olay, hair care, and personal care. Using the segment table in the filing, beauty...