The Procter & Gamble Company (PG) manufactures and sells an array of branded consumer packaged goods that are sold at every level of the retail market. The company operates through five segments: Beauty, Grooming, Health Care, Fabric Care and Home Care, and Baby Care and Family Care.
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The Beauty segment offers antiperspirants and deodorants, cosmetics, personal cleansing, skin care, hair care, hair colors, prestige products, and professional salon products under the Head & Shoulders, Olay, Pantene, SK-II, and Wella brand names. The Grooming segment provides blades and razors, pre- and post-shave products, and electronic hair removal devices under the Braun, Fusion, Gillette, Mach3, and Prestobarba brand names. The Health Care segment offers feminine care and incontinence products; toothbrush, toothpaste, and other oral care products; and gastrointestinal, rapid diagnostics, respiratory, vitamins, and other personal health care products. This segment markets its products under the Always, Crest, Oral-B, and Vicks brand names. The Fabric Care and Home Care segment provides bleach and laundry additives, fabric enhancers, and laundry detergents; air care, dish care, and surface care products; batteries; pet care products; and professional products. This segment sells its products under the Ace, Ariel, Dawn, Downy, Duracell, Febreze, Gain, Iams, and Tide brand names. The Baby Care and Family Care segment offers baby wipes, diapers, pants, paper towels, tissues, and toilet papers under the Bounty, Charmin, and Pampers brand names.
The company markets its products through mass merchandisers, grocery stores, membership club stores, drug stores, department stores, salons, high-frequency stores, and e-commerce in approximately 180 countries worldwide. The Procter & Gamble Company was founded in 1837 and is based in Cincinnati, Ohio. (Daily Chart) (Weekly Chart) |
17 May 2015
Price $81.05 1yr Target $88.59 Analysts 17 1yr Cap Gain 9.30% Dividend $2.65 Yield 3.26% 1yr EST Tot Return 12.56% Market Cap $219.89 Bil Beta 0.46 EPS (ttm) $3.37 Payout Ratio 78.63% EPS next yr $4.21 EPS next 5yr 6.73% P/E 24.05 PEG 3.58 Forward P/E 19.26 Debt/Equity 0.53 ROA 6.40% ROE 13.70% ROI 11.70% Sales $78.11 Bil Income $9.60 Bil Profit Margin 12.29% |
Revenues, Earnings and Dividends
Revenues and earnings are pretty easy to see and understand through 2014 but each of the estimates for 2015/2016 are a little more difficult to understand unless you realize that the company is selling off its unprofitable or less profitable subsidiaries. The company's strategy going forward is to concentrate on those companies that can significantly enhance the top and bottom lines.
P&G's initial sale was selling off its Duracell Battery unit. That company brought in a lot of revenues but not a lot of profit. It also got rid of a lot of potential liabilities for the company. I expect additional sales of segments of the company to affect future revenues and earnings so the estimates for 2015 and 2016 can only be seen as estimates. I expect there's a high probability that these estimates will change depending on the timing of the sales.
Revenues and earnings are pretty easy to see and understand through 2014 but each of the estimates for 2015/2016 are a little more difficult to understand unless you realize that the company is selling off its unprofitable or less profitable subsidiaries. The company's strategy going forward is to concentrate on those companies that can significantly enhance the top and bottom lines.
P&G's initial sale was selling off its Duracell Battery unit. That company brought in a lot of revenues but not a lot of profit. It also got rid of a lot of potential liabilities for the company. I expect additional sales of segments of the company to affect future revenues and earnings so the estimates for 2015 and 2016 can only be seen as estimates. I expect there's a high probability that these estimates will change depending on the timing of the sales.
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Year (June)
2016 Est 2015 Est. 2014 2013 2012 2011 2010 2009 2008 2004 |
Revenues
$75.95 Bil $76.37 Bil $83.06 Bil $83.58 Bil $82.00 Bil $81.10 Bil $77.56 Bil $76.69 Bil $83.50 Bil $51.40 Bil |
Earnings
$4.20 $3.96 $4.01 $3.86 $3.66 $3.93 $4.11 $4.26 $3.64 $2.32 |
Dividend
$2.78 $2.63 $2.53 $2.36 $2.21 $2.05 $1.88 $1.72 $1.55 $0.98 |
Payout Ratio
66.19% 66.41% 65.58% 61.13% 60.38% 52.16% 45.74% 40.37% 42.58% 42.24% |
When you look at the revenue growth you begin to see why the company started this transition to a smaller but more profitable company. Revenue growth rates were stagnating the last few years while the earnings growth rates were inconsistent. The company was forced to increase the earnings payout ratio in order to maintain a growing dividend. A decade ago P&G was paying out 40% of their earnings in the form of dividends and keeping 60% to grow the company. Today that percentage has reversed and if they didn't do something either the dividend would be in trouble or the company would be in trouble.
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Revenue Growth Rate
1 year = -0.63% 2 year = 0.64% 3 year = 0.79% 4 year = 1.72% 5 year = 1.60% 10 year = 4.91% |
Earnings Growth Rate
1 year = 3.88% 2 year = 4.67% 3 year = 0.66% 4 year = -0.62% 5 year = -1.21% 10 year = 5.62% |
Dividend Growth Rate
1 year = 7.20% 2 year = 6.99% 3 year = 7.18% 4 year = 7.70% 5 year = 8.02% 10 year = 9.94% |
The Competition
The Proctor and Gamble Company is part of the Personal Products Industry which is part of the Consumer Goods Sector of the economy. Below is a list of the major corporations included in this industry and are listed in the order of their market capitalization.
The Proctor and Gamble Company is part of the Personal Products Industry which is part of the Consumer Goods Sector of the economy. Below is a list of the major corporations included in this industry and are listed in the order of their market capitalization.
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The Proctor and Gamble Company (PG)
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Colgate-Palmolive Company (CL)
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Kimberly-Clark Company (KMB)
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The Estee Lauder Companies (EL)
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Energizer Holdings (ENR)
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Coty Inc (COTY)
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Spectrum Brands Holdings (SPB)
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Avon Products Inc. (AVP)
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Nu Skin Enterprises Inc. (NUS)
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Inter Parfums Inc (IPAR)
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Natural Health Trends Corp (NHTC)
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Blyth Inc (BTH)
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United-Guardian Inc. (UG)
My Perspective
The recent pullback in the price of P&G stock below $80 made this a very nice buying opportunity for investors. Unfortunately I didn't get in until recently after it had risen back up to $80.50 per share. I expect to continue to buy shares in this company until it reaches twenty times next years earnings per share. Based on estimates of $4.21, I'll continue to accumulate shares up to $84.20 per share. At that point I'll stop and wait for a pullback.
I'm not in any particular hurry to accumulate a significant position in P&G. I expect the stock price of this company to be volatile as their transition plays out. I expect the media to be both positive and negative as the company decides which subsidiaries it intends to sell off. As a result the stock price should both rise and fall with these stories providing ample opportunity for great entries at great prices.
The recent pullback in the price of P&G stock below $80 made this a very nice buying opportunity for investors. Unfortunately I didn't get in until recently after it had risen back up to $80.50 per share. I expect to continue to buy shares in this company until it reaches twenty times next years earnings per share. Based on estimates of $4.21, I'll continue to accumulate shares up to $84.20 per share. At that point I'll stop and wait for a pullback.
I'm not in any particular hurry to accumulate a significant position in P&G. I expect the stock price of this company to be volatile as their transition plays out. I expect the media to be both positive and negative as the company decides which subsidiaries it intends to sell off. As a result the stock price should both rise and fall with these stories providing ample opportunity for great entries at great prices.
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