After A Few Tumultuous Years, Procter & Gamble's Efforts Begin To Bear Fruit

Following Procter & Gamble Co's PG quarterly results, Goldman Sachs said the management's efforts are beginning to bear fruit.

Improved business efforts include streamlining the company's cost structure, material pruning of portfolio, a new CEO, modest organizational realignment and overhaul of incentive compensation down to market activation level.

Q3 Review, Improvement May Be Unsustainable

Analyst Jason English noted that the company reported better than expected Q1 EPS on better organic sales growth and also reiterated its full year guidance.

However, English is of the view that this is unlikely to be a sustained turn, given the historical pattern of unsustained improvement and the easier comparisons for the quarter. Although believing that real improvement is afoot, the firm feels it would translate into a middle-of-the-pack algorithm of low-single-digit sales and mid-to-high EPS growth beyond.

Given the company's relative premium to other global mega-cap staples companies, the firm thinks the company needs to deliver more to drive relative outperformance.

The firm has a Neutral view on shares, but raised its price target to $92 from $90.