What’s Next for The Procter & Gamble Company (PG)

Shares of The Procter & Gamble Company (NYSE:PG) jumped $3.18, or 4%, to $81.88 after the ouster of embattled CEO Bob McDonald and the announcement that he will be replaced by former CEO A.G. Lafley.

McDonald, at the helm since 2009, had been under the microscope from the consumer products giant’s board amid a string of weak earnings reports. While he did make some notable progress of late, refocusing on P&G’s best-selling brands and cutting costs, sales growth has trailed rivals Colgate-Palmolive Company (NYSE:CL) and Unilever plc (ADR) (NYSE:UL).

For the quarter ended March 31, The Procter & Gamble Company (NYSE:PG) posted lackluster results. Profits came in at $2.57 billion, up from $2.41 billion in the same quarter a year ago. Net sales rose a slim 2% to $20.6 billion. Organic sales increased 3%, coming in at the low end of the company’s forecast.

Shares, up 22% since the start of the year to an all-time high of $82.54, stumbled nearly 5% following the uninspiring report.

The company has been reducing headcount and slashing costs in an effort to fund the development of new products such as single-dose Tide Pods laundry detergent and thicker Bounty paper towels. But competitors have fought back with some heavy discounting, weighing on P&G’s progress in this area.

In addition, The Procter & Gamble Company (NYSE:PG)’s Olay skin-care line continues to underperform. It’s those kinds of limp showings that prompted McDonald’s expulsion.

Rivals giving P&G a run

Earnings for Colgate-Palmolive Company (NYSE:CL)’s latest quarter were $1.32 per share on revenue of $4.32 billion, up from $1.24 per share and revenue of $4.30 billion in the same quarter a year ago. For the current fiscal year, Colgate is expected to post EPS of $2.85.

The company just split shares 2-for-1. A leading stock-split theory says a company splits shares when they are trading well above the target range for where the company would like its shares trade. Forward splits are a good indication of sustained and strong earnings going forward.

Over the last 10 years, a 2-for-1 split model portfolio has produced a 14% annualized return, besting the 8% gain for the Standard & Poor’s 500 index, including dividends, according to Hulbert Financial Digest.

That suggests Colgate’s future looks solid.

Founded in 1806 by William Colgate as a starch, soap and candle company, Colgate now markets a broadly diversified mix of products worldwide running the gamut from household and personal care products to industrial supplies to sports and leisure time equipment.