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Procter & Gamble Co PG

Morningstar Rating
$167.94 −0.35 (0.21%)
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Company Report

Decelerating Sales Growth at Wide-Moat Procter & Gamble Fails to Signal an Eroding Brand Position

For the first time in more than 20 quarters, Procter & Gamble posted just 3% organic sales growth in its third fiscal quarter, lagging the mid- to high-single-digit marks that have more recently characterized the business, primarily on the heels of less price contribution (3%, down from 7% in the first quarter). However, we don’t believe this suggests cracks in the firm’s competitive prowess. After rightsizing its category and geographic reach by shedding around 100 brands about 10 years ago, P&G also embraced a more holistic approach to brand investing (consisting of how a product performs, the packaging, brand messaging, execution in stores and online, and the value a product offers its retail partners and end consumers). In this context, we think P&G’s strategic aims—investing in product innovation and marketing to support its portfolio of daily use, essential offerings—should ensure its brands maintain clout with retailers and consumers, ultimately supporting its wide moat over the long term.

Price vs Fair Value

PG is trading at a 752% premium.
Price
$168.25
Fair Value
$654.00
Uncertainty
Low
1-Star Price
$275.77
5-Star Price
$644.70
Economic Moat
Yrx
Capital Allocation
Kllvlfdyds

Bulls Say, Bears Say

Bulls

If retailers and consumers find favor with leading branded operators rather than lower-priced options, P&G's sales trajectory may outpace our expectations.

Bears

A weak consumer spending backdrop in China has been an Achilles' heel for P&G's beauty segment (nearly one fifth of sales), and demand could remain tepid until economic conditions in the region improve.

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News

Trading Information

Previous Close Price
$168.29
Day Range
$167.41168.42
52-Week Range
$141.47170.91
Bid/Ask
$167.94 / $167.97
Market Cap
$396.43 Bil
Volume/Avg
1.1 Mil / 6.0 Mil

Key Statistics

Price/Earnings (Normalized)
25.76
Price/Sales
4.95
Dividend Yield (Trailing)
2.31%
Dividend Yield (Forward)
2.39%
Total Yield
3.19%

Company Profile

Since its founding in 1837, Procter & Gamble has become one of the world's largest consumer product manufacturers, generating more than $80 billion in annual sales. It operates with a lineup of leading brands, including more than 20 that generate north of $1 billion each in annual global sales, such as Tide laundry detergent, Charmin toilet paper, Pantene shampoo, and Pampers diapers. P&G sold its last remaining food brand, Pringles, to Kellogg in calendar 2012. Sales outside its home turf represent around 53% of the firm's consolidated total.
Sector
Consumer Defensive
Industry
Household & Personal Products
Stock Style Box
Large Core
Total Number of Employees
107,000

Competitors

Valuation

Metric
PG
KMB
OR
Price/Earnings (Normalized)
25.7620.8931.94
Price/Book Value
8.0646.507.53
Price/Sales
4.952.405.34
Price/Cash Flow
20.5215.9227.48
Price/Earnings
PG
KMB
OR

Financial Strength

Metric
PG
KMB
OR
Quick Ratio
0.400.470.70
Current Ratio
0.690.811.10
Interest Coverage
20.738.0735.25
Quick Ratio
PG
KMB
OR

Profitability

Metric
PG
KMB
OR
Return on Assets (Normalized)
13.82%13.44%12.99%
Return on Equity (Normalized)
35.61%303.53%23.11%
Return on Invested Capital (Normalized)
20.62%27.67%17.20%
Return on Assets
PG
KMB
OR
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