Procter & Gamble Company (P&G), a global leader in consumer-branded and packaged products, has done it again. It beat down inflation and consumer trade by delivering solid financial results in the most recent quarter.

"We delivered strong results in the third quarter of the fiscal year 2023 in what continues to be a very difficult cost and operating environment," said Jon Moeller, Chairman of the Board, President, and Chief Executive Officer, in a press statement accompanying the release of the financial results.

By "difficult ... environment," Moeller refers to the elevated inflation that has squeezed family budgets, fueling a trade from a more expensive brand name to less costly generic consumer products.

The Cincinnati-based company, with a portfolio of well-known brands in various categories such as personal care, health, grooming, and household care, reported net sales of $20.1 billion for the quarter, a 4% annual increase. On an organic base, which excludes the impacts of foreign exchange and acquisitions and divestitures, sales rose at a better rate of 7%. In addition, diluted EPS came at $1.37 -- 3% higher than the prior year.

Operating cash flow came at $3.9 billion, and net earnings at $3.4 billion for the quarter. Adjusted free cash flow productivity was 92%, allowing the company to return $3.6 billion of cash to shareholders --- $2.2 billion in dividend payments and $1.4 billion in share buybacks.

Wall Street cheered P&G's earnings and revenues, which beat analysts' estimates and sent the company's shares sharply higher on Friday's regular trading session. Moeller attributed the robust third quarter performance to the effective execution of the company's strategies, which built and sustained momentum around the brand.

"We remain committed to our integrated strategies of a focused product portfolio of daily use categories where performance drives brand choice, superiority, productivity, constructive disruption, and an agile and accountable organization structure," Moeller said. "These strategies have enabled us to build and sustain strong momentum, and we're confident they remain the right strategies to deliver balanced growth and value creation going forward."

Over its long history, P&G has developed several competitive advantages -- "moats," to use Warren Buffett terminology -- to defend its market from the competition and win in good and bad times.

One of these advantages is innovation. The company's robust innovation process has married Edison's lab's creativity with Ford's factory's speed and reliability, as Bruce Brown and Scott D. Anthony put it in a Harvard Business Review article a decade ago. It has helped the company develop new products that address consumer needs better than the competition, like Head & Shoulders shampoo, Tide detergent, Pampers diapers, Gillette and Venus razors.

Another competitive advantage is branding, marketing, and advertising these products through campaigns that resonate with customers. In addition, innovation and branding allow the company to charge premium prices over the competition and pass on higher production costs to consumers, as was the case in recent quarters.

A third advantage is economies of scale, the cost benefits associated with a large production size across product lines lower costs. For instance, P&G's annual sales are 10 times higher than Clorox's, its close competitor.

A fourth advantage is economies of scope, the cost benefits associated with selling many products (over 2,000) through the same distribution channels, also helping the company cut costs. Moreover, scale and scope have provided P&G with the bargaining power to place its products with major retailers like Walmart and Target.

A fifth advantage is a highly efficient global supply chain, which leads to further cost savings. And more cost savings are to come as the company has launched advanced technologies and processes to optimize its supply chain through automation, data analytics, and real-time inventory management.

P&G's multiple advantages have helped the company to allocate capital effectively, as evidenced by a rising Economic Value Added (EVA), which stands at 8.37%, up from 8% two years ago, according to estimates.

Wall Street has appreciated P&G's advantages. Over the last five years, its shares have gained 111% compared to a 55% gain from the S&P 500.

Editor's note: The author owns shares of P&G.