Revenue Analysis:
Total and Operating Revenue: PG has shown a fluctuation in total and operating revenue over the past periods, peaking in Q3 2023 at $21.871 billion before decreasing to $20.195 billion by Q1 2024. This indicates volatility in the market conditions or sales performance.
Gross Profit Margin: Gross profit has varied, declining from $11.297 billion in Q4 2023 to $10.34 billion in Q1 2024. The gross profit margin has shown slight declines, suggesting changes in cost of goods sold or pricing strategies.
Cost Management:
Cost of Revenue: The cost of revenue has been maintained closely with slight fluctuations, indicating steady production or service delivery costs relative to revenue.
Operating Expense: There has been a rise in operating expenses from $5.416 billion in Q1 2023 to $5.88 billion in Q1 2024, potentially reflecting increased selling, general, and administrative expenses.
Total Expenses: There has been a general increase in total expenses, which tracks closely with changes in operating expenses, impacting overall financial efficiency.
Profitability Analysis:
EBITDA: Earnings before interest, taxes, depreciation, and amortization peaked at $6.806 billion in Q4 2023 before decreasing to $5.537 billion by Q1 2024. This suggests operational earnings before non-cash and finance-related deductions have decreased.
Operating Income: Operating income decreased from $5.765 billion in Q3 2023 to $4.46 billion in Q1 2024. This indicates a decrease in operational efficiency or increased costs.
Pretax Income: Pretax income has similarly shown a downward trend, which is critical since it reflects the profitability before any tax impact.
Net Income: Net income has also seen a reduction from $4.526 billion in Q3 2023 to $3.754 billion by Q1 2024, indicating a lower overall profitability post-tax.
Cash Flow Indicators:
Reconciled Depreciation: Depreciation has shown minor variations, indicating consistent application of depreciation policies and stable asset base.
Interest Expense: Interest expenses have a minor uptrend, potentially reflecting increased borrowing or higher interest rates affecting finance costs.
Taxation:
Tax Rate: The tax rate fluctuated, starting at 20.1% in Q1 2023 and adjusting to 17.7% by Q1 2024, indicating changes in tax obligations or benefits availed.
Tax Provision: The tax provision needed to cover income taxes payable has shown an increase in absolute terms, aligning with the pretax profitability.
Tax Effect of Unusual Items: There have been instances of significant tax effects due to unusual items, particularly a negative $299 million in Q4 2023, which have materially impacted the tax obligations for those periods.
Shareholder Metrics:
Diluted and Basic EPS: Earnings Per Share (EPS), both basic and diluted, have seen a downward trend from Q3 2023 values of 1.89 and 1.83 respectively to 1.56 and 1.52 by Q1 2024. This decrease signals reduced profitability per share of stock.
Average Shares: The number of shares has remained relatively stable, suggesting that the change in EPS is not due to changes in share count but underlying profitability.
Net Income Available to Common Stockholders: This metric essentially reflects net income adjusted for preferred dividends, and its trend also specifies lower income available for common shareholders over recent periods.
Conclusion:
PG has experienced a downturn in terms of revenue, profitability, and shareholder returns in recent periods. Given these challenges, it might be prudent for PG to investigate and address the increasing costs and declining sales efficiency. Strategies might include cost control measures, reconsideration of pricing strategies, or boosting operational efficiency. Additionally, exploring more tax efficiency and possibly deleveraging to reduce interest expenses could be beneficial.