Procter & Gamble Stock Has Outperformed The S&P 500 Since 2017 End: Here’s Why

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Procter & Gamble

Procter & Gamble (NYSE: PG) stock price gained almost 50% from around $92 at 2018 end to $135 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 drop in the outstanding share count. The stock’s gains have helped PG outperform the S&P, which returned a little under 40% over the same period.

In our interactive dashboard, Why Procter & Gamble Stock Moved: PG Stock Has Gained 47% Since 2017, we break down the factors behind this move.

(A) PG’s Total Revenue has risen 20% from $66.8 billion in FY 2018 to $80.2 billion currently

  • PG’s total revenue has risen steadily from $66.8 billion in FY ’18 to $80.2 billion in FY ’22 (PG’s fiscal year ends in June), and currently stands at around the same level.
  • As of FY ’22, PG’s largest segment is Fabric & Home Care, contributing $27.6 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 around 20% between FY ’20 and FY ’22, standing at almost $11 billion as of FY ’22.
  • 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 27% from $25.70 in FY 2018 to $32.58 currently

  • PG revenue rose from $66.8 billion in 2018 to $80.2 billion currently, while the outstanding share count dropped from 2.6 billion in 2018 to 2.5 billion currently.
  • Due to this, RPS has risen steadily from $25.70 in FY ’18 to $32.58 currently.

(C) Price-To-Sales (P/S) multiple for PG rose strongly from 3.3x in 2017 to 5.1x by 2021 end but has pulled back to 4.1x currently, still almost 1.3x higher than its 2017 level

  • PG’s P/S multiple rose strongly to around 5.1x 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 4.1x.
  • For additional details about the company stock returns and comparison to peers, see Procter & Gamble (PG) Stock Return Comparison.

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 Returns Sep 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 PG Return -2% -18% 60%
 S&P 500 Return -7% -23% 64%
 Trefis Multi-Strategy Portfolio -11% -25% 196%

[1] Month-to-date and year-to-date as of 9/23/2022
[2] Cumulative total returns since the end of 2016

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