Joe Raedle

Procter & Gamble (NYSE:PG) shares dipped on Thursday as declining sales volumes aroused investor concern, a priority that also impacted many consumer staples corporations on the day.

Shares of the Ohio-based traded in a volatile manner on Thursday because the market digested earnings that met expectations, but relied heavily on heavy-handed price hikes. A ten% increase in prices from the prior 12 months offset a 6% volume decline, a far larger drop than the two.63% anticipated by the Street prior to the print. Organic sales forecasts for the full-year also got here in barely lower than analyst expectations.

“Understanding the present demand environment and the conservatism embedded within the updated outlook will likely be key focus points on the decision, but within the meantime, we expect shares to be down modestly,” UBS analyst Peter Grom advised clients after the print. “For HPC peers, we predict the marginally improved FX/commodity outlook supports the potential for margin recovery/earnings revisions, but we expect concerns on the weaker organic sales growth within the quarter to be a greater focus today.”

Shares of Newell Brands (NWL) -2.98%, Church & Dwight (CHD) -1.01%, The Honest Company (HNST) -4.83%, and Clorox (CLX) -0.87% kept pace with or exceeded Procter & Gamble’s (PG) modest decline near the midpoint of Thursday’s trading day. Colgate-Palmolive (CL) and Kimberly-Clark Corporation (KMB) slid by comparatively smaller margins.

To be certain, Morgan Stanley’s Dara Mohsenian told clients that the negative stock response to Procter & Gamble’s (PG) report is overblown. As such, he advised clients that the patron staples manufacturer could offer significant upside for opportunistic investors on Thursday.

“We view valuation as compelling with PG trading at a reduction to HPC peers despite greater [long-term] growth potential, in addition to higher visibility,” he wrote, reiterating a Buy-equivalent rating. “We expect investors to purchase on any stock weakness today, with FY23 EPS guidance likely now conservative and still solid underlying sales growth.”

Read more on the main points of the outcomes.