Procter & Gamble Report Fuels Selling In Defensive Names


Shutterstock photo

Consumer staple stocks took hits earlier in the week afterProcter & Gamble ( PG ) reported disappointing earnings and gave lukewarm full-year guidance.

P&G gapped below its 50-day moving average in huge volume Wednesday. Group peerColgate-Palmolive ( CL ) also fell sharply in heavy turnover.

In IBD's Food-Packaged group, Big Cap 20 componentGeneral Mills ( GIS ) also took a hit, falling nearly 3% Wednesday in fast trade. It was a day of institutional selling for the stock, but it's too early to say its run is over, especially with its consistent track record of earnings growth and solid yield of 3.1%.

Some of the company's more popular brands include Cheerios, Betty Crocker and Haagen-Dazs.

After a flat-base breakout in February, the stock is still holding above its 10-week moving average, currently around 48. Strong stocks tend to find buying support after an initial pullback to the 10-week line. Longer-term support for General Mills is its 40-week moving average around 42, which happens to coincide with its last breakout area.

In March, the company reported solid results. Earnings growth accelerated for the second straight quarter, rising 16% to 64 cents a share. The results topped views by 7 cents.

Revenue growth also accelerated for the second straight quarter, rising 8% to $4.43 billion, slightly ahead of estimates for $4.36 billion. U.S. sales rose 2% to $2.66 billion. International sales rose 24% to $1.2 billion, helped by its recent acquisitions of Brazilian food maker Yoki Alimentos and Yoplait Canada.

For the current quarter, profit is seen falling 9% from a year ago due to higher costs and increased spending. Sales are seen rising 6% to $4.3 billion. For fiscal 2013 ending in May, earnings are seen rising 5% to $2.69 a share and 9% to $2.93 in fiscal 2014.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Personal Finance , Investing Ideas
More Headlines for: CL , GIS , PG

More from Investor's Business Daily


Investor's Business Daily

Investor's Business Daily

Follow on:

Find a Credit Card

Select a credit card product by:
Select an offer:
Data Provided by