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P&G's Strategy Gaining Traction as Sales Rise

Erin Lash, CFA

Erin Lash: The main headline coming out of Proctor and Gamble's first-quarter results was the pronounced uptick in its top-line performance. More specifically, organic sales grew 4% in the quarter and that growth was fairly broad-based with four of the firm's five operating segments posting improvement to the tune of a mid- to high-single-digit clip.

The one laggard remains the firm's baby and family care segment, which slipped about 1%. But we still think that these results indicate that the firm's efforts to rationalize its brand mix and hone its resources on its highest performing categories is beginning to gain traction.

The firm isn't focused merely on growing its top line. Rather, the firm is also working through extracting another $10 million of costs from its operations as a means by which to offset commodity costs headwinds, which ate into profitability, as well as to fuel additional spending behind its marketing as well as research and development.

Despite the 8% uptick in shares, we still view the stock as mildly undervalued and would suggest long-term investors consider building a position in this wide-moat name.