After 10% Rise In Six Months, Procter & Gamble Stock Running Out Of Juice?

by Trefis Team
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Procter & Gamble stock (NYSE: PG) has seen an impressive rise of 10% over the last six months and currently trades at $141 per share. The sharp rally was driven by a recovery in beauty and cosmetics demand, combined with a continued rise in demand for home care products. This is evident from Procter & Gamble’s full-year 2021 earnings, where revenue came in at $76.1 billion, up from $71 billion in FY 2020. Operating margins, too, rose from 22.1% to 23.7% over this period, as the company managed to control expenses. This helped EPS rise to $5.69 in FY 2021 from $5.13 in FY 2020.

So, after the recent rally will PG stock continue its upward trajectory over the coming weeks, or is a correction in the stock more likely? According to the Trefis Machine Learning Engine, which identifies trends in a company’s stock price data for the last ten years, returns for PG stock average close to just 1% in the next one-month (21 trading days) period after experiencing a 9.9% rise over the previous six-month (126 trading days) period. The stock has a strong 61.7% probability of rising marginally over the next one month. But how would these numbers change if you are interested in holding PG stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis Machine Learning Engine to test Procter & Gamble stock chances of a rise after a fall and vice versa. You can test the chance of recovery over different time intervals of a quarter, month, or even just one day!

MACHINE LEARNING ENGINE – try it yourself:

IF Procter & Gamble stock moved by -5% over five trading days, THEN over the next 21 trading days, PG stock moves an average of 3.1 percent, with a strong 68.3% probability of a positive return.

Some Fun Scenarios, FAQs & Making Sense of Procter & Gamble Stock Movements:

Question 1: Is the average return for PG stock higher after a drop?

Answer:

Consider two situations,

Case 1: PG stock drops by -5% or more in a week

Case 2: PG stock rises by 5% or more in a week

Is the average return for PG stock higher over the subsequent month after Case 1 or Case 2?

PG stock fares better after Case 1, with an average return of 3.1% over the next month (21 trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an average return of 1.9% for Case 2.

In comparison, the S&P 500 has an average return of 3.1% over the next 21 trading days under Case 1, and an average return of just 0.5% for Case 2 as detailed in our dashboard that details the average return for the S&P 500 after a fall or rise.

Try the Trefis machine learning engine above to see for yourself how PG stock is likely to behave after any specific gain or loss over a period.

Question 2: Does patience pay?

Answer:

If you buy and hold Procter & Gamble stock, the expectation is over time the near-term fluctuations will cancel out, and the long-term positive trend will favor you – at least if the company is otherwise strong.

Overall, according to data and Trefis machine learning engine’s calculations, patience absolutely pays for most stocks!

For PG stock, the returns over the next N days after a -5% change over the last five trading days is detailed in the table below, along with the returns for the S&P500:

Question 3: What about the average return after a rise if you wait for a while?

Answer:

The average return after a rise is understandably lower than after a fall as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks.

PG’s returns over the next N days after a 5% change over the last five trading days is detailed in the table below, along with the returns for the S&P500:

It’s pretty powerful to test the trend for yourself for Procter & Gamble stock by changing the inputs in the charts above.

What if you’re looking for a more balanced portfolio instead? Here’s a high-quality portfolio that’s beaten the market since 2016.

 

See all Trefis Price Estimates and Download Trefis Data here

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