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Procter & Gamble: A Long-Term Winner
Stock Analysis & Ideas

Procter & Gamble: A Long-Term Winner

Headquartered in Cincinnati, Procter & Gamble (PG) is a manufacturer and seller of branded packaged consumer goods. Its products center around five segments, including Beauty, Grooming, Health Care, Fabric & Home Care, and Baby, Feminine & Family Care. 

Another government shutdown might be expected if the fast-spreading omicron variant of the coronavirus persists, which could benefit some sectors, including the consumer staples sector. Therefore, by being one of the largest producers of household items and holding a significant market share in areas like healthcare, baby care, home care, and feminine care, among others, P&G could be a golden egg in investors’ baskets. 

Price Trend 

The company has shown consistent price performance, reflecting an overall uptrend. As a result, the stock has gained 9.9% over the past year and 10.1% so far this year. Over the past five years, shares of P&G have gained almost 80%.

P&G Action on Climate Change

In September, P&G revealed its plan to achieve net-zero greenhouse gas (GHG) emissions across its operations and supply chain, from raw material to retailer, by 2040, along with its interim 2030 goals. Targets include reducing emissions across the company’s operations by 50%, and 40% across the supply chain.

Currently, with the climate crisis affecting every home and family globally, consumers are seeking environment-friendly products, so it appears that the company’s plan is moving in the right direction.

P&G CEO David S. Taylor commented, “We are fully committed to use P&G’s innovation and ingenuity to unlock new solutions to address climate change. The task ahead of us is urgent, difficult and much bigger than any single company or country. P&G is tackling these challenges head-on by reducing our footprint and leveraging our scale to foster unprecedented collaboration across our value chain.”

Dividend History

Investors looking for investment options with a steady source of income could consider P&G. The company has a strong track record of dividend payments with consecutive increases.

The company has come a long way in terms of its quarterly cash dividend payments, from $0.40 per share in 2009 to $0.87 in 2021. The company’s annual dividend of $3.48 per share now reflects a dividend yield of 2.29%.

Earnings Expectations

P&G is likely to release its second-quarter Fiscal 2022 earnings results in mid-January. Analysts expect earnings of $1.66 per share on revenues of $20.38 billion.

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Earnings Recap 

On October 19, the company reported outstanding first-quarter Fiscal 2022 earnings (ended September 30). Net sales in the quarter increased 5% year-over-year to $20.3 billion, exceeding consensus estimates of $19.91 billion. Earnings declined 1% to $1.61 per share but still topped the Street’s estimate of $1.59.

For Fiscal 2022, P&G expects sales growth in the range of 2% to 4% on a year-over-year basis, while GAAP diluted EPS is expected to grow between 6% and 9%. 

Supportive TipRanks Metrics

The analytics tools on TipRanks show some impressive positive stats about the company.

P&G stock scores a 9 of 10 from TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations. 

Furthermore, TipRanks data shows that financial blogger opinions are 91% Bullish on PG, compared to a sector average of 70%. 

Additionally, TipRanks’ Website Traffic Tool, which uses data from SEMrush Holdings (SEMR), the world’s biggest website usage monitoring service, offers insight into P&G’s performance. According to the tool, the P&G website recorded a 21.89% increase in global visits in November compared to the same period last year. Also, a quarter-to-date comparison showed growth of 15.42% compared to Q2 2021, and year-to-date website traffic growth stands at 2.85%.

Expert’s Opinion 

Following the first-quarter earnings results, Jefferies analyst Kevin Grundy reiterated a Buy rating on the stock and increased the price target to $163 (7.41% upside potential) from $162. 

Grundy commented, “The cost/supply chain environment pose material headwinds in FY22; however, intra-quarter US consumption trends accelerated in F1Q and should help drive modest upside in the quarter…Strong 1Q upside is supportive of further multiple expansion; Buy.”
 

Wall Street’s Take

The Street is cautiously optimistic on P&G, with a Moderate Buy consensus rating based on 4 Buys and 2 Holds. The average Procter & Gamble price target of $156.67 implies 3.24% upside potential to current levels.

Disclosure: At the time of publication, Priti Ramgarhia did not have a position in any of the securities mentioned in this article. 

Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of TipRanks or its affiliates  Read full disclaimer >

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