Procter & Gamble Fails to Clean Up on Q2

You would think that Procter & Gamble

was losing money based on some of the negative rhetoric bouncing around Wall Street on Friday morning. In fact, it recorded 2Q profits that beat expectations. OK, they only just beat them, but they beat them all the same. In this economic climate, a small victory is surely a victory all the same. Apparently the market does not think so, and the reception was cool bordering on seasonably cold. According to

, shares in PG were trading in the red on Friday morning following reported earnings of $1.10 per share, just ahead of the $1.08 consensus view. The revenue was $22.1 billion, just shy of the $22.2 billion consensus. Chief Executive Bob McDonald cited the “difficult macroeconomic environment,” in Friday's earnings announcement, while touting the company's “solid top-line growth.” Meanwhile, Citi analyst Wendy Nicholson said that, “The company continues to report relatively low-quality and overall weak EPS growth. While f/x is what it is, and we are glad that PG is resetting the bar to reflect f/x pressure (as opposed to under-investing in an effort to offset the f/x drag), we nonetheless are discouraged by (i) today's news of a big acquisition-related write off – which calls into question PG's ability to pay the right price for its acquisitions, (ii) earlier news of the delay of Tide Pods – which calls into question PG's ability to innovate successfully and (iii) PG's continued non-operating-income-driven EPS – which calls into question PG's forecasting ability and its management credibility.” It seems harsh to question P&G management's credibility given that they are still over expectations, but Nicholson did also maintain her Buy rating while admitting that the company's performance “really isn't all that bad.”