Despite Steady Gains, Procter & Gamble Stock Has Underperformed The S&P 500 Since 2018

+2.93%
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PG: Procter & Gamble logo
PG
Procter & Gamble

Procter & Gamble (NYSE: PG) stock price jumped 60% from around $91 at 2018 end to $147 currently, primarily due to favorable changes in its revenues and P/S multiple. Additionally, the company witnessed a steady rise in its revenue per share, helped by a rise in the outstanding share count. However, despite the stock’s gains, PG has underperformed the S&P, which returned almost 70% over the same period.

In our interactive dashboard, Why Procter & Gamble Stock Moved: PG Stock Has Gained 60% Since 2018, we break down the factors behind this move.

(A) PG’s Total Revenue has risen 19% from $66.8 billion in FY 2018 to $76.1 billion currently

  • PG’s total revenue has risen steadily from $66.8 billion in FY ’18 to $76.1 billion in FY ’21 (PG’s fiscal year ends in June), and currently stands at $79.6 billion on an LTM basis.
  • As of FY ’21, PG’s largest segment is Fabric & Home Care, contributing $26 billion to total sales, bringing in almost 35% of the company’s revenues.
  • Besides this, the health care segment has been the fastest growing segment, with sales rising over 20% between FY ’19 and FY ’21, standing at almost $10 billion as of FY ’21.
  • For details about PG revenues and comparison to peers, see Procter & Gamble (PG) Revenue Comparison
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(B) Revenue per share (RPS) increased 26% from $25.70 in FY 2018 to $32.51 currently

  • PG revenue rose from $66.8 billion in 2018 to $79.6 billion currently, while the outstanding share count dropped from 2.6 billion in 2018 to 2.4 billion currently.
  • Due to this, RPS has risen steadily from $25.70 in FY ’18 to $32.51 currently.

(C) Price-To-Sales (P/S) multiple for PG rose strongly from 3.3x in 2018 to 5.2x by 2021 end but has pulled back to 4.5x currently, still almost 1.4x higher than its 2018 level

  • PG’s P/S multiple rose strongly to around 5.2x by late 2021, on the back of rising investor expectations surrounding continued demand growth for its products across all markets, leading to a rise in the company’s sales.
  • However, due to the increased economic uncertainty weighing on the broader markets, the P/S multiple has pulled back, currently standing at around 4.5x.
  • For additional details about the company stock returns and comparison to peers, see Procter & Gamble (PG) Stock Return Comparison.

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Returns Jun 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 PG Return -1% -10% 75%
 S&P 500 Return 1% -13% 86%
 Trefis Multi-Strategy Portfolio 3% -17% 227%

[1] Month-to-date and year-to-date as of 6/8/2022
[2] Cumulative total returns since the end of 2016

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