Buy or Sell Procter & Gamble Stock?

We believe there is a near-equal mix of good and bad in PG stock given its overall Moderate operating performance and financial condition. This is aligned with the stock’s Moderate valuation because of which we think it is Fairly Priced.

Below is our assessment:

No matter where PG stock goes, your portfolio should stay on track. See how High Quality Portfolio can help you do that.

Let’s get into details of each of the assessed factors but before that, for quick background: With $337 Bil in market cap, Procter & Gamble provides branded consumer packaged goods worldwide, including beauty, personal care, and hygiene products such as conditioners, shampoos, deodorants, and skincare under various well-known brands.

[1] Valuation Looks Moderate

This table highlights how PG is valued vs broader market. For more details see: PG Valuation Ratios

[2] Growth Is Weak

• Procter & Gamble has seen its top line grow at an average rate of 1.8% over the last 3 years
• Its revenues have grown 1.2% from $84 Bil to $85 Bil in the last 12 months
• Also, its quarterly revenues grew 3.0% to $22 Bil in the most recent quarter from $22 Bil a year ago.

This table highlights how PG is growing vs broader market. For more details see: PG Revenue Comparison

[3] Profitability Appears Strong

• PG last 12 month operating income was $21 Bil representing operating margin of 24.1%
• With cash flow margin of 22.3%, it generated nearly $19 Bil in operating cash flow over this period
• For the same period, PG generated nearly $17 Bil in net income, suggesting net margin of about 19.7%

This table highlights how PG profitability vs broader market. For more details see: PG Operating Income Comparison

[4] Financial Stability Looks Strong

• PG Debt was $36 Bil at the end of the most recent quarter, while its current Market Cap is $337 Bil. This implies Debt-to-Equity Ratio of 10.7%
• PG Cash (including cash equivalents) makes up $11 Bil of $128 Bil in total Assets. This yields a Cash-to-Assets Ratio of 8.8%

[5] Downturn Resilience Is Moderate

PG saw an impact slightly better than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.

2022 Inflation Shock

• PG stock fell 24.3% from a high of $163.41 on 28 April 2022 to $123.76 on 10 October 2022 vs. a peak-to-trough decline of 25.4% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 2 May 2024
• Since then, the stock increased to a high of $179.70 on 2 December 2024 , and currently trades at $144.05

 
2020 Covid Pandemic

• PG stock fell 23.2% from a high of $127.14 on 6 February 2020 to $97.70 on 23 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 28 July 2020

 
2008 Global Financial Crisis

• PG stock fell 40.8% from a high of $74.67 on 12 December 2007 to $44.18 on 9 March 2009 vs. a peak-to-trough decline of 56.8% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 29 January 2013

The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.