Procter & Gamble’s Stock Up 25% Over The Past Year: Should You Still Hold On?

PG: Procter & Gamble logo
Procter & Gamble

Procter & Gamble’s (NYSE: PG) stock currently stands at around $125 per share, up from around $99 at this time last year. However, we expect a fair price of around $130 per share for P&G’s stock. Our price estimate is based on expected 2020 earnings per share of $4.98 and a price-to-earnings multiple of around 26.1x.

We have summarized our forecasts in our interactive dashboard on Procter & Gamble’s Valuation where we detail some of the key steps in identifying P&G’s valuation sensitivity to changes in its segment revenues, shares outstanding, and valuation multiple.

We arrive at the stock price estimate for Procter & Gamble as:
Stock Price = (Total Revenue x Net Income Margin / Shares Outstanding) x P/E Multiple

Relevant Articles
  1. Despite Steady Gains, Procter & Gamble Stock Has Underperformed The S&P 500 Since 2018
  2. Company Of The Day: Proctor & Gamble
  3. Procter & Gamble Stock Has Risen A Strong 1.7x Since 2018: Here’s Why
  4. Surging Prices Bode Well For These Stocks
  5. Procter & Gamble Stock Has Risen 1.7x Since 2018 – Well Deserved?
  6. Despite High Current Valuations, Estee Lauder Stock Looks Like A Strong Bet

A] Estimating Procter & Gamble’s Total Revenue

  • P&G’s revenue has grown from $65.06 billion in 2017 to $67.68 billion in 2019, on the back of an increase in selling prices and steady growth in revenue from emerging markets.
  • After shedding over 100 underperforming brands and reinventing its supply chain in the last 5 years, P&G is finally expected to report steady, consistent revenue growth.
  • We expect this growth to continue, driving total revenue to $70.57 billion in 2020, a ~4% YoY growth.


B] Deriving Procter & Gamble’s Net Income

  • Net Income dropped from $9.86 billion in 2017 to $3.63 Billion in 2019, primarily due to the $8 billion Gillette write-down.
  • However, we expect it to grow to around $12.29 billion in 2020, as net margins rise to levels above that in 2017.

C] Determining Procter & Gamble’s EPS

  • EPS has dropped from $3.80 in 2017 to $1.45 in 2019, and we estimate it to be $4.98 in 2020.
  • Expected EPS growth in 2020 can be attributed to higher Net Income, driven by growing revenue and net margins, and lower outstanding share count.

D] Estimating Procter & Gamble’s Share Price

  • Our Price Estimate of $130 For P&G’s Stock is based on our Detailed Valuation Model, and implies a 26.1x P/E Multiple on expected 2020 EPS of $4.98

See all Trefis Price Estimates and Download Trefis Data here

What’s behind Trefis? See How It’s Powering New Collaboration and What-Ifs For CFOs and Finance Teams | Product, R&D, and Marketing Teams