Procter & Gamble’s (PG) share price has been rising steadily over the last few decades as it has positioned the company as the ultimate dividend king.
The stock of this company has been increasing its dividends since the 1950s, and has also survived events such as the First World War and Second World War, The Cold War, The Great Depression and The Global Financial Crisis.
In the past decade, its stock price has doubled and now exceeds $400 billion. As shown in the chart below, it has continued to perform better than some of its biggest competitors, including Colgate-Palmolive and Unilever.
Brand Global Diversified
Procter & Gamble, a popular brand, is used every day by millions.
The company owns some global brands like Pampers. Always, Ariel. Downy. Gillette.
The company is highly diversified and focuses its efforts on five main areas: beauty, grooming and health care.
The company’s biggest market is fabric and homecare, which accounts for 36% net sales. This business is followed by health and beauty, baby and feminine care, family and household care, as well as family and familial care.
P&G has seen its business grow, thanks to the middle class and growing populations in many countries. An increasing population will lead to more spending on products such as Pampers and Always.
It is a highly competitive market, and companies such as Unilever and Churchill and Dwight are fighting to gain market share. It is also competing against newer and cheaper brands, often from India and China.
E-commerce is also changing the FMCG industry. In the past, shelf space was a major concern. Today, anyone can sell their products on sites like Amazon.
P&G, and the other major brands still have their advantages. They are known brands, which have been around for many generations. P&G is able to spend more on Amazon ads than smaller companies. It also has the benefit of having shelf space at places such as Walmart and Target.
In the past decade, it has steadily increased its revenue, from $74 Billion in 2014, to $82 Billion last year. The company’s profits also continue to rise.
Cramer says to buy P&G because it’s’so better than before’
P&G to earn ahead
Procter & Gamble’s upcoming results, scheduled to be released on October 18th will serve as the next major catalyst.
The results of its latest financial report will give you a better idea about the company’s business. According to its most recent results, the volume of the company’s beauty, baby, feminine and family products declined by 1% during the past quarter.
The volume in all three other segments increased by 2%. The company had previously been able to compensate for its lower volumes by raising prices.
The company’s net income dropped 7%, to $3.14 Billion. Its revenues were flat at $20.50 billion. Its operating margin fell from 20,3% to 18,9% during the quarter.
Analysts predict that Procter & Gamble will report revenue of $21,96 billion for the quarter ending December 31, 2011, an increase of 11% over last year’s same-quarter figures. Analysts expect revenue to increase by 2.5% to $86.14 Billion for the entire year.
Procter & Gamble’s (P&G), despite a lackluster increase in sales, has boosted its earnings per share.
Value concerns still remain
Procter & Gamble’s biggest problem is its overvalued stock, given that the company has stagnated in its growth. P&G has a premium because it is one of few US dividend giants, and its payouts have been increased in recent years.
P&G is trading at 24 times earnings – slightly more than the S&P500 average and sector median. The forward EV/EBITDA ratio is 17 which is higher than the median sector value of 10.95.
According to P&G’s current valuation, it would take over 24 years for you to recover the money you invested in the company.
As we’ve seen in the past with Moody’s and Visa, some blue-chip stocks can be overvalued. P&G’s performance will continue to be good as long as it continues to publish modest results.
Stock analysis of Procter & Gamble
Procter & Gamble Stock
The P&G stock price is in a bull market. The price has been above moving averages for a long time, indicating that the bulls have control.
Stocks have formed an ascending wedge pattern which is considered a bearish signal in the stock market. The MACD lines have also formed a cross-over pattern that is bearish. Relative Strength Index has formed an ascending slant and is also moving down.
The stock is likely to have a negative breakout following the publication of its financial results. In this case, the stock may retreat towards the next level at $160. A move over the high for this year of $177.80 could lead to further gains.
The post Procter & Gamble Stock Forms a Risky Pattern Ahead of Earnings may change as new information becomes available
This site is for entertainment only. Click here to read more
