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

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Pet advocates applaud the fact Colgate-Palmolive Company (NYSE:CL) was one of the first companies recognized by PETA as an entity that tests on animals only when mandated by government regulations. In addition, Colgate continues to actively seek alternative testing methods.

Income seekers also like Colgate’s polished 2.22% yield.

Meanwhile, the outlook for Anglo-Dutch consumer goods company Unilever is dovish. The company, whose products include Dove soap, Ben & Jerry’s and Magnum, attributed its sluggish growth since the start of 2013 to the waning European economy and cold weather.

While first-quarter sales rose 4.9%, goosed by a 10.4% rise in emerging markets, the number was below the expected growth of 5.6%. In Europe, sales dipped 3.1%, hurt by the ongoing Eurozone recessionary environment.

The slow start to 2013 caused some analysts to question if the 6.2% growth target for the full year is attainable.

Chief Executive Paul Polman was also cautious: “Developed markets growth remained sluggish. Europe faced a particularly strong prior year comparator and whilst the overall performance was solid, the reported growth was held back by the slow start to the ice cream season and weakness in spreads.”

With the economy in Europe still challenged, Unilever plc (ADR) (NYSE:UL)’s results are also apt to be challenged in the months ahead.

How Procter & Gamble could clean itself up

Despite all the drubbing and challenges ahead, The Procter & Gamble Company (NYSE:PG) is an appealing investment.

Over the past year, P&G shares are up some 26%, ahead of rival Colgate and just a few percentage points behind Unilever plc (ADR) (NYSE:UL). Shares trade at an 11% discount to Colgate’s on a forward P/E multiple.

Looking forward, revamping tried-and-true lines and creating innovative products could get customers and shareholders excited.

Also, as the Wall Street Journal noted, “slimming down the [company’s] cost structure” could prove lucrative.

The Procter & Gamble Company (NYSE:PG)’s operating margin has stayed at roughly 19% the past several years, well below the nearly 24% maintained by Colgate. “That is extraordinary given P&G’s scale advantage: Its sales are almost five times the size of Colgate’s,” WSJ writes.

Productivity improvements could also provide some big payoffs.

Hopes are high CEO Lafley will clean up and spruce up what needs cleaning and sprucing. Lafley garnered his revered reputation for brokering The Procter & Gamble Company (NYSE:PG)’s $57 billion acquisition of Gillette in 2005, which gave P&G’s sagging grooming and beauty division a much needed face-lift.

We’ll see if Lafley still has the goods to lift P&G again.

The article What’s Next for Procter & Gamble originally appeared on Fool.com is written by Diane Alter.

Diane Alter has no position in any stocks mentioned. The Motley Fool recommends Procter & Gamble and Unilever. Diane is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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