Consumer goods company Procter & Gamble Co (NYSE:PG) may not be stuck in neutral after all, even if the post-earnings-announcement PG stock price isn’t exactly soaring. After factoring in currency headwinds and a handful of divestitures, the once-great iconic growth machine looks like it’s starting to grow meaningfully again.

There’s still work to be done, to be sure. Relatively new CEO David Taylor is getting it done though; cutting costs where they can be cut, culling product lines that don’t add much to the bottom line and investing in products that have real potential.

In other words, with the company’s fiscal fourth quarter numbers in hand, Procter & Gamble stock may have earned a spot on investors’ watch lists.

Procter & Gamble Q4 Earnings

When all was said and done, Procter & Gamble earned 79 cents per share on revenue of $16.1 billion last quarter. Both fell short of the 93 cents per share earned in the same quarter a year earlier, when the consumer staples giant drove $16.55 billion in sales.

But, the top and bottom line last quarter each topped estimates for a profit of 74 cents per share of PG stock and revenue of $15.83 billion.

[ad#Google Adsense 336×280-IA]And, the fourth quarter results may have even been better than they seemed on the surface.

The 3% slide in year-over-year revenue? Part of it was driven by adverse foreign exchange rates, which knocked off three percentage points from the top line.

The sale of some brands in the last year chopped another two percentage points off the Q4 revenue total.

Organic sales — and sales by volume — were actually up 2% for the quarter, proving the company is at least capable of driving growth with the right product lines. Its healthcare and grooming divisions did particularly well in terms of organic growth rates.

It wasn’t just a revenue-growth affair for P&G either. The bottom line is showing promise too as more cost-cutting efforts go into effect.

CFO John Moeller explained on CNBC’s “Squawk Box” this morning:

“We’re in the middle of the biggest transformation of this company. Totally transforming our cost structure. Working to strengthen and simplify our portfolio. Rebuilding our product supply systems around the world, and strengthening our organization and culture… We started a $10 billion cost takeout program in 2012, which we’ve exceeded. We targeted $6 billion in cost of good savings, we delivered $7.2 billion. We were looking at a 10% reduction in overhead enrollment, and we’re now at 25%.”

The cost of goods it sold last quarter was down 5% from Q4-2015’s costs.

David Taylor said earlier this year that he’s aiming to cull another $10 billion in expenses, continuing the work predecessor A.G. Lafley started before Taylor took the helm in July of last year.

It seems like a big number for a company that drove $65.3 billion worth of sales over the course of the last four quarters. But, it may not be as out of reach as some would suggest. Taylor started with P&G in 1980, working his way up through the manufacturing ranks rather than the administrative ones. He knows what’s happening on the front lines.

Looking Ahead for PG Stock

As for 2017, one of the key reasons the PG stock price didn’t bolt higher despite another progressive quarter was its outlook. Procter & Gamble believes revenue will only grow about 1% this year, factoring in the likelihood of more currency turbulence. On an organic basis, the growth outlook only ramps up to 2%.

Core earnings are only projected to rise by a single-digit growth rate. That suggests no more than a 9% improvement on fiscal 2016’s profit of $3.67 per share of Procter & Gamble stock, which would at best put earnings at $4.00. Analysts were already looking for an average fiscal 2017 profit of $3.97.

The company’s guidance may be a conservative outlook however, despite Moeller’s message that P&G tries to deliver accurate rather than lowballed projections. Under Taylor, Procter & Gamble seems to have re-found the winning formula that made it a powerhouse so many years ago.

At the very least, PG stock is worth watching again, now that each quarter looks a little better than the previous one.

— James Brumley

[ad#IPM-article]

Source: Investor Place

As of this writing, James Brumley did not hold a position in any of the aforementioned securities.