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PG

Procter & Gamble NYSE:PG Stock Report

Last Price

US$126.48

Market Cap

US$301.7b

7D

-1.7%

1Y

-11.1%

Updated

06 Oct, 2022

Data

Company Financials +

The Procter & Gamble Company Competitors

Price History & Performance

Summary of all time highs, changes and price drops for Procter & Gamble
Historical stock prices
Current Share PriceUS$126.48
52 Week HighUS$165.35
52 Week LowUS$126.21
Beta0.39
1 Month Change-6.75%
3 Month Change-12.78%
1 Year Change-11.13%
3 Year Change3.72%
5 Year Change37.25%
Change since IPO1,335.23%

Recent News & Updates

Oct 06
Increases to The Procter & Gamble Company's (NYSE:PG) CEO Compensation Might Cool off for now

Increases to The Procter & Gamble Company's (NYSE:PG) CEO Compensation Might Cool off for now

Under the guidance of CEO Jon Moeller, The Procter & Gamble Company ( NYSE:PG ) has performed reasonably well recently...

Oct 03
The Procter & Gamble Company (NYSE:PG) Shares Could Be 42% Below Their Intrinsic Value Estimate

The Procter & Gamble Company (NYSE:PG) Shares Could Be 42% Below Their Intrinsic Value Estimate

Today we'll do a simple run through of a valuation method used to estimate the attractiveness of The Procter & Gamble...

Oct 03

Procter & Gamble: Defensive, Other Than The Yield

Summary Procter & Gamble is a consumer staple company with a solid track record in recent years. Procter has seen softer growth this year, but the share price declines are mostly the result of higher interest rates. I like the long-term potential here, as higher rates have hurt quite a bit, as has been the case with many dividend names these days. In April 2020 I called Procter & Gamble (PG) a resilient play in the storm which was out there at the time of course, with the pandemic in its early innings. The company was benefiting from its defensive positioning, selling everyday essentials, as it benefited from a near term hoarding effect as well. Despite the strong performance, I thought the valuations were a bit rich, despite a plunge in interest rates and the fact that opportunities wee arising left and right. A Solid Play In April 2020, Procter just posted its third quarter results with volumes up 6%, as adverse currency moves made that total revenues were up a percent less to $17.2 billion. Reported earnings came in at $2.9 billion, up in line with topline sales growth as some modest reduction in the share count allowed for a 10% increase in adjusted earnings to $1.17 per share. At the time Procter was a $125 stock which was set to earn $5 per share that year, translating into a 25 times earnings multiple. Net debt was posted at $20 billion and change, just surpassing $17-$18 billion in annual EBITDA, giving the company plenty of firepower with no leverage concerns seen in an uncertain period of time, as the overall valuations were quite demanding. So despite a solid performance in an uncertain period of time, and a strong balance sheet, it was the overall valuation which was too high for me to see appeal and to get involved with Procter. Performing, And Than Not After trading at $125 in the spring of 2020, shares have gradually moved higher and hit a high at $165 per share at the start of 2022. What followed has been a big retreat to $125 again, mostly driven by the impact of a strong dollar and rising interest rates. As it turned out, Procter posted its fiscal 2020 sales at $71.0 billion on which core earnings of $5.12 per share reported in the summer of that year. The year which followed was another solid year, with revenues up 7% to $76.1 billion, as core earnings per share were up 11% to $5.66 per share, the result of higher prices, volumes and a relative weaker dollar (that year). Net debt came in at $21.7 billion, with EBITDA coming in at nearly the same number. The fiscal year 2022, as released in July, saw a bit more modest growth with sales up 5% to $80.2 billion, yet core earnings per share rose just 3% to $5.81 per share. Slower earnings growth is due to the nature of sales growth, as Procter saw volumes come down 1%, while prices rose 8% and currency moves subtracted some 4 points from reported sales growth. To ignite some earnings per share growth, Procter has continued to pursue share buybacks as this has resulted in a modest built-up in net debt, up to $24.2 billion. Nonetheless, this remains a very manageable amount as EBITDA came in at $20.8 billion on a reported basis last fiscal year. The 2023 guidance is a bit mixed. Organic sales are seen up 3-5%, but this is likely largely driven by pricing, although the contribution of price and volumes has not been quantified. Currency headwinds are expected to cut sales growth by three points, leaving just a point or two in expected revenue growth. Despite an anticipated $3.3 billion, or $1.33 per share in headwind from inflation in general, in specific freight expenses and currency moves, the company sees adjusted earnings up between one and four points. With earnings set to come in a few pennies short of $6 per share in the current fiscal year, to which there are clearly some risks, it is needless to say that the earnings multiple has fallen to 21 times earnings. This makes that a 4% earnings yield at 25 times earnings has risen to nearly 5%, likely the result of higher interest rates ever since. Leverage remains very modest, yet the pace of organic growth of Procter is lagging a bit, as the company has seen strong momentum in recent years, after Procter has been regarded as a solid operator in the last couple of years. And Now? With shares coming under pressure, the magical 3% dividend yield comes in sight as the annual dividend payout now comes in at $3.52 per share, although the magic of this 3% number is less pronounced as has been the case in more recent times. This of course comes as interest rates have moved up so violently.

Sep 21

Procter & Gamble Is Likely To Revisit 2022 Lows

Summary P&G is trading below key resistance levels. EPS revisions continue strongly downward. The stock is overpriced given its margin headwinds. Consumer staples stocks were the place to be for the early part of this year. After growth stocks began to unravel in early 2022, more defensive names reigned. That is just about always the case during periods of market turmoil, and 2022 proved to be no different. However, it is my view that we are nearing the end of this bear market, and until I see evidence to the contrary, I'm continuing to position that way. That means I don't see a lot of value in owning defensive names this late in the cycle, as I believe the best way to take advantage of the next bull run is with growth stocks. That leaves perennial dividend favorites like Procter & Gamble (PG) in a place where I don't think they should feature heavily in most investors' portfolios. In this article, we'll look at some of the struggles and successes of P&G, but ultimately, I think the stock is unattractively priced and faces too many headwinds to want to own right now. That was virtually the same the last time I covered P&G, and the stock is roughly flat in the past year and a half. That's better than the S&P over that time, to be fair, but given the outlook for margins and the current valuation, I think P&G has a downward bias for the foreseeable future, especially relative to the broader market. Has Wall Street abandoned P&G? While Wall Street may not have fully abandoned P&G, the below does not have a good look. You'd think a prolonged period of market weakness - like what we've had for 2022 - would produce strong outperformance in consumer staples companies. That simply hasn't been the case, and it's largely because of input cost inflation. More on that below, but the chart looks like a stock that nobody wants to own. StockCharts There are two levels of fairly stout resistance overhead, one at $138 and the next at $141, and given the way this stock has been trading, I think taking those out anytime soon is a tall order. The momentum indicators are bouncing, but quite feebly, and the stock is seeing lower peaks on bounce attempts. This simply does not have a good look, and this is not a chart I would attempt to trade on the long side. One positive note is that P&G is outperforming its peers, as seen in the bottom two panels, but its peer group is weak against the S&P 500. So while P&G is slightly outperforming, it's doing so in a weak group. I won't belabor the point on the chart here, but the bottom line is that the bias for this stock - in my view - is lower until further notice. What about the fundamentals? We're all fully aware of the inflation situation because you cannot get away from commentary and data on it. The situation is unique, given we previously had years and years of persistently low inflation, followed by a sudden skyrocketing of higher prices. That has impacted different companies in different ways, but for companies that make and ship things, it's been doubly tough. P&G certainly fits that bill, but as we'll see, it's seemingly weathering the storm fairly well. Below we have guidance for this fiscal year from management, with the lower bound in blue, the upper bound in black, and the analyst consensus in green. TIKR We can see analysts simply went right in the middle of the range provided by management, but to be fair, P&G's revenue is usually quite easy to forecast given its steady demand. That gives us a good baseline for this year to then look at the out years from a demand perspective. TIKR Consensus estimates for the next few years are for ~4% average annual growth, which again is pretty typical for P&G. One of the things income investors like about P&G is its predictability, and that's one of the things that has afforded it the ability to raise its dividend for more than six decades consecutively. Where things get interesting is when we look at margins, which we have below on a trailing twelve months basis for the past few years. We have gross margins in blue, SG&A costs in green, and operating margins in black. These are the primary components of a company's profitability and give us good insight into whether management is able to effectively price their goods and manage expenses. TIKR Gross margins have been in decline for several quarters, and it would appear that, despite pricing actions being taken, it may be some time before that gets better. Indeed, with freight and input costs - two huge line items for a manufacturer of consumer staples - still very elevated, P&G looks set to struggle with gross margins despite sizable pricing increases. The good news is that P&G owns some of the most recognized and purchased brands in the world, so it's able to push pricing increases through. However, there's a point that will stop working. On the plus side, the company has done a nice job of controlling expenses. We can see SG&A costs have declined from almost 27% of revenue in 2021 to just over 24% on a TTM basis last quarter. That's quite significant, and it has kept operating profits from massive declines due to gross margin contraction. The management team is doing what is necessary to preserve profits, but just like pricing increases, these things have endpoints where more cuts simply aren't an option. Still, I'm impressed by expense management in a difficult environment. If we add these things together - demand via revenue projections, and profitability via margins - we get the below, which is the EPS revision schedule for P&G from its extensive analyst community. Seeking Alpha Unfortunately, this isn't pretty. There have been numerous downward revisions to earnings estimates not only for this year but out years as well. This is the impact of lower margins, because as we saw, revenue is pretty steady with mid-single digit gains each year. This chart is a function of margin headwinds, primarily, and it's not a good story. If you wonder why the stock is being sold and the price chart looks the way it does, I'd point you here. It's very difficult for any stock with persistently downward revisions in earnings to rally and P&G is no exception. Let's value this thing We'll start with the forward P/E ratio for P&G for the past five years to give us some historical context on today's valuation. We can see during this period the stock has ranged between 16X and 27X earnings, but the former was for a brief period almost five years ago. More recently, the stock has been in a tight range of 21X to 25X, for the most part.

Shareholder Returns

PGUS Household ProductsUS Market
7D-1.7%-2.1%1.9%
1Y-11.1%-10.1%-18.8%

Return vs Industry: PG underperformed the US Household Products industry which returned -10.1% over the past year.

Return vs Market: PG exceeded the US Market which returned -18.8% over the past year.

Price Volatility

Is PG's price volatile compared to industry and market?
PG volatility
PG Average Weekly Movement3.1%
Household Products Industry Average Movement4.2%
Market Average Movement7.0%
10% most volatile stocks in US Market15.5%
10% least volatile stocks in US Market2.9%

Stable Share Price: PG is less volatile than 75% of US stocks over the past 3 months, typically moving +/- 3% a week.

Volatility Over Time: PG's weekly volatility (3%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
1837106,000Jon Moellerhttps://www.pginvestor.com

The Procter & Gamble Company provides branded consumer packaged goods worldwide. It operates through five segments: Beauty; Grooming; Health Care; Fabric & Home Care; and Baby, Feminine & Family Care. The Beauty segment offers conditioners, shampoos, styling aids, and treatments under the Head & Shoulders, Herbal Essences, Pantene, and Rejoice brands; and antiperspirants and deodorants, personal cleansing, and skin care products under the Olay, Old Spice, Safeguard, Secret, and SK-II brands.

The Procter & Gamble Company Fundamentals Summary

How do Procter & Gamble's earnings and revenue compare to its market cap?
PG fundamental statistics
Market CapUS$301.72b
Earnings (TTM)US$14.46b
Revenue (TTM)US$80.19b

20.9x

P/E Ratio

3.8x

P/S Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
PG income statement (TTM)
RevenueUS$80.19b
Cost of RevenueUS$41.98b
Gross ProfitUS$38.21b
Other ExpensesUS$23.75b
EarningsUS$14.46b

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

Oct 19, 2022

Earnings per share (EPS)6.06
Gross Margin47.65%
Net Profit Margin18.03%
Debt/Equity Ratio67.2%

How did PG perform over the long term?

See historical performance and comparison

Dividends

2.9%

Current Dividend Yield

59%

Payout Ratio