Stock of the Day

April 25, 2023

Procter & Gamble (PG)

$162.62
-$3.33 (-2.0%)
Market Cap: $381.27B

About Procter & Gamble

Procter & Gamble Co. engages in the provision of branded consumer packaged goods. It operates through the following segments: Beauty, Grooming, Health Care, Fabric and Home Care, and Baby, Feminine and Family Care. The Beauty segment offers hair, skin, and personal care. The Grooming segment consists of shave care like female and male blades and razors, pre and post shave products, and appliances. The Health Care segment includes oral care products like toothbrushes, toothpaste, and personal health care such as gastrointestinal, rapid diagnostics, respiratory, and vitamins, minerals, and supplements. The Fabric and Home care segment consists of fabric enhancers, laundry additives and detergents, and air, dish, and surface care. The Baby, Feminine and Family Care segment sells baby wipes, diapers, and pants, adult incontinence, feminine care, paper towels, tissues, and toilet paper. The company was founded by William Procter and James Gamble in 1837 and is headquartered in Cincinnati, OH.

Procter & Gamble Bull Case

Here are some ways that investors could benefit from investing in Procter & Gamble:

  • The current stock price is around $166.92, which reflects a stable position in the market, making it an attractive entry point for potential investors.
  • Procter & Gamble has received multiple recent upgrades from analysts, with target prices being raised, indicating strong confidence in the company's future performance.
  • The company has a solid consensus rating of "Moderate Buy" from analysts, suggesting that a majority believe the stock will perform well in the near term.
  • Procter & Gamble's diverse product segments, including Beauty, Grooming, and Health Care, provide resilience against market fluctuations, allowing for steady revenue streams.
  • Insider transactions show that executives are actively managing their shares, with recent sales indicating confidence in the company's valuation and future prospects.

Procter & Gamble Bear Case

Investors should be bearish about investing in Procter & Gamble for these reasons:

  • Despite recent upgrades, some analysts have lowered their target prices, which may indicate concerns about the company's growth potential in a competitive market.
  • The stock has shown a relatively low beta of 0.41, suggesting it may not respond strongly to market movements, which could limit potential gains for investors seeking high volatility.
  • Insider ownership is only 0.18%, which may raise questions about the alignment of management's interests with those of shareholders.
  • The company's debt-to-equity ratio of 0.50 indicates a moderate level of debt, which could pose risks if market conditions change or interest rates rise.
  • Procter & Gamble's price-to-earnings ratio of 26.58 suggests that the stock may be overvalued compared to its earnings, which could deter value-focused investors.

Procter & Gamble Is Going To Set A New High 

Written By Thomas Hughes on 4/21/2023

Procter & Gamble stock price forecast

Procter & Gamble’s (NYSE: PG) Q3 report echoes news from other Dividend Kings that have reported this week. The report is a shining example of why Dividend Kings, Dividend Aristocrats and dividend growth stocks like Procter & Gamble, Clorox (NYSE: CLX) and Genuine Parts Company (NYSE: GPC) are great investments for long-term holders. Not only do they have the foresight to operate their businesses in a manner that sustains annual distribution growth, but they have the operating leverage to roll with the times. 

Today that means cutting costs, improving efficiency and focusing on consumer satisfaction. What this means for PG investors is outperformance, improving margins, robust cash flow and increased guidance. This catalyzes higher share prices, putting this stock on track to set another all-time high soon.  

Procter & Gamble Still Has Pricing Power 

The latest retail sales figure suggests that America’s retailers are losing their grip on pricing power, but that is not true for consumer staples stocks or Procter & Gamble. The company reported $20.07 billion in revenue for the FQ3 period, which is up 3.5% and beat the analysts' consensus by 380 basis points. The gain was driven by strong sales in all segments, led by 9% growth in Healthcare and Fabric & Home. All segments grew at least 6%, underpinned by a 10% system-wide increase in realized prices. A 3% decline in volume offset the increases in prices, Procter & Gamble is not immune to the conditions, but this was not enough to offset pricing and resulted in growth. 

Procter & Gamble was able to widen the margin but not enough to completely offset rising costs and FX headwinds. The gross margin grew by 150 basis points and the operating margin by 40 to drive a 220 basis point increase in adjusted earnings. Adjusted earnings of $1.37 are up from last year's $1.34, beating the Marketbeat.com consensus by 380 basis points. The takeaway is that top-line strength carried through to the bottom line and led to increased guidance. 

Procter & Gamble held its EPS guidance steady due to sustained economic pressures but raised the revenue and cash flow outlook. The company expected revenue growth near 1% compared to the prior -1% to 0% with cash returns rising. The company expects to buy back at least $7.4 billion in shares this year, up $1.4 billion at the low end of the range. The $1.4 billion increase is a 23% premium to the buyback minimum and 0.4% of the market cap. The new minimum is worth 2% this fiscal year, on top of the 2.5% dividend. 

Procter & Gamble’s Dividend Is Worth Every Penny 

Procter & Gamble isn’t the lowest value in the consumer staples sector, and it isn’t the best yield, but the 2.5% in payout is worth every penny of the 25X earnings you pay to get it. Procter & Gamble is among the bluest blue-chip dividend payers and is as reliable as they come. You may find a higher yield with names like Kraft Heinz (NASDAQ: KHC), but they come with higher risks. If the sell side can be used as an example, they think the stock is worth buying. The institutions own about 62%, which is a lot for such a widely-held name, and they are buying.

The analysts may also provide a catalyst for higher prices. They view it as a Moderate Buy with a price target that assumes fair value at the current level. The Q3 report may inspire upgrades and/or price target increases that would put the stock at an all-time high, if not higher. 

You want to view the monthly chart for this stock because the daily and weekly are showing a lot of noise. The monthly chart shows a clear uptrend and a market increase after confirming that trend. Assuming the market follows this trend, this stock should reach an all-time high in the next few months. Proctor & Gamble Stock price chart

Recent News