Procter & Gamble (NYSE:PG) did post earnings at $0.67 EPS versus $0.66 estimates from First Call. It also put next quarter targets for $0.88 to $0.90 versus $0.91 estimates and said that fiscal June-2008 earnings per share would grow at a double-digit rate on sales growth and improved margins. It is going to face near-term margin pressure due to higher commodity prices for an upcoming conversion to a compacted formula for detergents.
But here is the kicker. The household products giant is going to buy back up to $30 Billion in stock in only a 3-year period. According to the company, this will be $8 to $10 Billion per year. This could represent 5% of the outstanding shares if the entire amount is used. Its whole buyback plan for fiscal 2007 was $5.7 Billion.
P&G has a market cap of $199 billion, and shares are within about 5% of its highs. Shares are not that volatile though, as its 52-week trading range is only $58.13 to $66.30. It is kicking out ample cash flows to fund the buyback with $13.4 Billion in cash flow from operations during fiscal 2007. Its current assets were $24 Billion, total assets including current were $138 Billion, and total liabilities were $71.25 Billion.
Jon C. Ogg
August 3, 2007
Jon Ogg can be reached at firstname.lastname@example.org; he does not own securities in the companies he covers.