Procter & Gamble Relies on Beauty for Ugly Quarter

Procter & Gamble

announced a low quality Q3 in its earnings report this morning, along with management dropping Q4 guidance down a considerable amount. The only division of the consumer packaged goods company that produced organic sales growth above estimates was Beauty, but that was not enough to save earnings. Currently trading down -4%, analysts expected PG to be weak today as the unsatisfactory results loom in the minds of investors seeing projected Q4 guidance to be reasonable, but not impressive by any means. "P&G reduced F12 guidance, which now includes core EPS of $3.82-$3.88 (down 1%- flat) from $3.93-4.03 prior and below our core EPS estimate of $3.97," Oppenheimer said in a report today. "Further, initial F4Q guidance includes core EPS of $0.79-$0.85 (-4% to +4%) vs. our $0.94 estimate. The quarter will be negatively impacted by a higher tax rate, by about $0.05." The research firm also stated that the market will likely be skeptical of FQ4 organic growth forecast for PG, as key discretionary categories remain weak for the company with the majority of its six segments underperforming. As a snowball effect has begun to spiral from dull pet care and snacks sales to less-than-encouraging fabric and home care profits, Procter & Gamble has started to roll back pricing increases across the world that will likely negatively impact Church & Dwight

and Colgate-Palmolive

, among other companies. Morgan Stanley views this as a negative move by the shaky business. As the company continues to try to get a hold on what future projections should be, for now it seems investors will not be snatching up Procter & Gamble shares any time soon. PG is currently trading at $64.14, down -3.88% YTD.