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Morningstar

P&G Looks Attractive Today

As the consumer giant make steady progress, we see the firm's shares as looking modestly undervalued in a pricey sector.

While we intend to review our discounted cash flow assumptions, we don’t foresee a material change to our $90 fair value estimate, beyond the time value of money. And despite its brand rationalization, P&G continues to operate with a portfolio of leading brands, making it a crucial partner for retailers looking to drive store traffic, supporting its wide moat. In a sector where discounts are few and far between, P&G strikes us as an attractive investment, with shares trading 5% below our valuation, as we think the market remains reluctant to buy into our contention that P&G is poised to drive accelerating sales growth (to a mid-single-digit level the next several years).

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About the Author

Erin Lash

Consumer Sector Director
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Erin Lash, CFA, is director of consumer sector equity research for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. In addition to leading the sector team, Lash covers packaged food and household and personal care companies.

Before joining Morningstar in 2006, she spent four years as an investment analyst covering retail, transportation, and technology firms for State Farm Insurance.

Lash holds a bachelor’s degree in finance from Bradley University and a master’s degree in business administration, with concentrations in accounting and finance, from the University of Chicago Booth School of Business. She also holds the Chartered Financial Analyst® designation. She ranked second in the food and tobacco industry in The Wall Street Journal’s annual “Best on the Street” analysts survey in 2013, the last year the survey was conducted.

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