Company Review Thursday · Proctor and Gamble

Company Review Thursday: Proctor and Gamble

Proctor and Gamble is the home of the world’s most popular brands such as Bounty, Crest, Dawn, Gain, Febreze, Pampers and Tide. In fact they have about 66 brands and of which 21 of them are worth $1 billion or more. Pretty impressive right?

Not even…

The most impressive thing about this company is probably the fact that the company started as a result of two men forging on during hard financial times here in the US. The story is detailed here, but in short two guys married sisters, whose father suggested they work together since they were doing similar business. They signed a partnership agreement in 1837 that would start a business on a $3,596.47 budget that would last through the banks closing in the 1830’s, the Civil War, the Spanish American War, Jim Crow Laws, the Great Depression and many more hard times marked in US history. This company has created high quality product brands that “help make your every day life a little easier” and generated great value for its shareholders over the years too. Here’s more:

Company Snapshot (Yahoo! Finance Data)
Name:  Proctor and Gamble (as of close of business 12/30/2015)
Ticker: PG
Current Price: $76.84
52 Week High Price:$91.79
52 Week Low Price: $65.02
Market Capitalization: $211.8B (Large Capital)
Price/Earnings (P/E Ratio): 25.60
Earnings/Share (EPS): $3.04
Dividend: $2.65/year (3.41% yield)
Industry: Household Products
Primary Business: Consumer Packaged Goods

The Good
Proctor and Gamble is a blue chip stock by every definition. It’s consistent in dividend increases on a year to year basis. It has a long standing  global presence and  high consciousness about the environment and keeping people safe with the use of their products. And even through the tumultuous year we experienced in 2015 in the stock market, Proctor and Gamble’s management and operations remain in tact. They are still dedicated to selling highest quality products on the market and participating in making the world a little bit better through philanthropy and product donation efforts.

The Bad
2015 was not the greatest year for Proctor and Gamble. In fact PG took a serious stock price hit over the last year dropping from almost $92 in the beginning of the year to closing the year with just under $80/share. Revenues took a serious hit in 2015 Quarter 4 and you would think that the cost of goods sold would take a proportional dip. But unfortunately that didn’t work out in PG’s favor and net income took a subsequent plunge.

The Ugly
Proctor and Gamble competes in a segment where pricing competition is fierce. Retailers sell PG items on the same shelf as other home product makers as well as private brands that are just as popular in some local regions. Also because PG offers their brands globally, they are exposed to foreign exchange currency fluctuations and international sales taxes. That’s significant exposure and causes PG to really work to keep their prices down. They take measures like cutting staff and factory workers, selling brands at a discount in stores or finding suppliers that have lower costs for their raw materials.

Proctor and Gamble had its beginnings in a financial rough patch of the US economy and has sustained through tough times. But with so many companies in direct competition, selling similar products for a portion of the price, it’s going to be tough to sustain in this current market. If you currently own PG, I’d say hold it. If you don’t have PG, buy half as many shares as you can afford right now. Don’t go all in. There are some other growth opportunities available like a personal favorite, Johnson and Johnson.

2 thoughts on “Company Review Thursday: Proctor and Gamble

  1. I would love your input on PayPal, which is now trading independently of eBay… ticker symbol: PYPL. If you are willing to write a review, I may repost it on my blog! Even though I am a purveyor of Good Luck Charms, Amulets, and so forth, I know where to invest my money for a healthy retirement, many years from now!

    Like

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