Procter & Gamble (NYSE: PG) is a stock whose underlying company sells all kinds of stuff everybody buys: toothpaste, coffee, diapers, shampoo. Just about every consumer buys P & G products at some time or another, whether they are even aware of it or not. As the leading consumer care products company, Procter & Gamble is the type of stock that grows steadily, pays a decent dividend, and provides a stability for a lot of investors’ and institutions’ portfolios.
Just check out the list of a small slice of Procter & Gamble products: Crest toothpaste and other dental products, Iams pet foods, Folgers Coffee (which it announced it will spin off), Head & Shoulders shampoo—well, you get the idea. These are but a few of the brands that Procter and Gamble owns. With a market cap of $200B, this is the 800-pound gorilla of the consumer care products industry. It has annual revenues of $76B, with annual net income in the $10B range.
On January 31, P & G reported earnings of 98 cents per share for the most recent quarter, on $21.6B revenue, which is $3.3B versus $3.1B or 84 cents for the year-over-year quarter. The guidance for Procter and Gamble remains upbeat, with an outlook for $3.45 per share for the upcoming year, which would be an increase of nearly 15%.
The stock has traded between 60.42 and 75.18 in the last twelve months, and has recently been in the $65 range. It pays a dividend currently over 2%. The stock trades at a multiple right now of just under 20, as this reflects that P & G is seen by some as having potential as a growth stock, not just a slow-grower or value play, despite long term investors often buying it as a stable core holding for their portfolios, or for the dividend. You’ll note the annual growth rate for EPS (earnings per share) is 15%, which some growth stocks strain to achieve. The stock price has reflected this, showing growth of 67% in the last five years. Dividends added to this give a kicker to total return.
Procter & Gamble began as a soap company in Cincinnati, Ohio, and has seen its fortunes grow to become the dominant consumer care products company in the world. It is considered a recession-proof stock (or at least recession-proof company, given the vagaries of the market), as even when the economy turns down, people still need their toothpaste, diapers, coffee and such.
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