What’s Going On Here?Procter & Gamble (P&G) is all spruced up with nowhere to go: the owner of Gillette, Pampers, and Pantene released better-than-expected earnings on Wednesday. What Does This Mean?There’s not exactly much to spend money on outside the house right now, so it looks like everyone’s been treating themselves to premium products they can enjoy between their own four walls. And that’s what P&G does best: the consumer staples company saw an 8% uptick in sales last quarter compared to the same time the year before, thanks in large part to the popularity of its shaving, styling, and cleaning products.
P&G doesn’t think demand’s going away anytime soon either: the days of panic-stockpiling are over, sure, but shoppers aren’t likely to be quite so relaxed about hygiene ever again (tweet this). The company’s so confident people aren’t going to wash their hands of, uh, washing their hands, in fact, that it upped its full-year earnings forecast. Why Should I Care?Zooming out: Old habits die hard.
Investors don’t necessarily share P&G’s can-do attitude: they’re concerned that pandemic-driven consumer habits – working from home, binge-watching movies, and online shopping – might scale back when the world opens up again. But at least it’s not just P&G they’re keeping a skeptical eye on: they’re just as suspicious of tech, streaming, and parcel delivery firms’ recent successes too.
The bigger picture: A bit less “Gamble”, a bit more “play it safe”.
Despite its surge in sales last year, P&G didn’t see its shares rise as much as the overall US stock market. That might be because it’s a “defensive” company that tends to see pretty stable demand no matter how the economy’s doing. That means it usually outperforms other stocks during market crashes – like it did last March – but lags behind them when investors see better days ahead – like it has since the vaccines were announced in November. | 