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P&G's Efforts Rewarded in Results

Erin Lash, CFA

Erin Lash: Over the last several years, much focus has resided within P&G's top-line trajectory, and the second-quarter results highlight that efforts to shed more than 100 brands from its mix and focus its investments behind its key brands are beginning to gain traction. More specifically, organic sales popped 4% in the quarter, similar to the gains reported in the prior quarter and on top of 2% growth in the year-ago period. Even more impressive is the fact that this growth was balanced and driven by both gains in price as well as volume. 

Despite this improving performance that we anticipate will persist over the longer term, the firm is fairly valued at current levels after popping at a mid-single digit clip on the results. We would suggest that investors await a more attractive risk-reward opportunity before building a position in this wide-moat name.