Procter & Gamble PG
What does Procter & Gamble do?
Procter & Gamble is a globally active consumer goods manufacturer based in the US. The company develops, produces and markets branded products for daily needs. These are grouped into segments: beauty, grooming and personal care, health care, fabric and home care, and baby, feminine and family care. Well-known brands include Pantene, Head & Shoulders, Olay, Gillette, Oral-B, Crest, Ariel, Pampers and Always.
Revenue arises mainly from sales to retailers, wholesalers, drugstore chains and, increasingly, online retailers. The end customers are households. In competition, P&G positions itself through strong brands, high spending on advertising and research, global economies of scale and a strong negotiating position with retailers. Competitors include Unilever, Colgate-Palmolive, Kimberly-Clark, Henkel and retailers' private labels. The products are repurchased regularly and are therefore considered comparatively insensitive to the economic cycle.
Score profile
Rank vs. Household & Personal Products (18 companies). 10 = top of the group, 5 = middle. Calculated from the metrics below, without AI.
Metrics compared with the industry
On profitability and quality, Procter & Gamble ranks above average in the group Household & Personal Products (7.8/10). On growth, the company ranks in the middle in the group Household & Personal Products (5.6/10). On valuation (higher = cheaper), the stock ranks below average in the group Household & Personal Products (2.2/10). On financial strength, Procter & Gamble ranks below average in the group Household & Personal Products (3.4/10).
| Metric | Stock | Group median | Ranking |
|---|---|---|---|
| Forward P/E | 22.8x | 16.5x | better than 42 % |
| Trailing P/E | 25.4x | 27.5x | better than 65 % |
| PEG ratio | 4.3x | 2.2x | better than 3 % |
| EV/EBITDA | 16.5x | 13.4x | better than 36 % |
| Price/sales | 4.5x | 2.5x | better than 8 % |
| Price/book | 7.2x | 4.1x | better than 16 % |
| Revenue growth | 4.0% | 1.4% | better than 69 % |
| Earnings growth | 0.8% | 3.6% | better than 42 % |
| Gross margin | 50.6% | 54.9% | better than 42 % |
| Operating margin | 26.9% | 14.3% | better than 92 % |
| Net margin | 18.2% | 9.4% | better than 92 % |
| Return on equity | 29.6% | 9.4% | better than 85 % |
| Debt/equity | 70.3% | 75.3% | better than 62 % |
| Current ratio | 0.7x | 1.1x | better than 8 % |
| Free cash flow yield | 3.2% | 4.1% | better than 32 % |
| Dividend yield | 2.6% | 2.5% | – |
| Payout ratio | 64.6% | 78.4% | – |
| Beta | 0.36 | 0.57 | – |
Valuation: what is Procter & Gamble worth?
Two valuation approaches – a discounted cash flow model and a valuation at the industry’s median multiples – give Procter & Gamble a model range of 100.67 USD to 162.42 USD per share.
23 analysts, average rating “Buy”, average price target 174.04 USD (+3.2%).
The full DCF matrix, the reverse DCF (what growth the price implies) and scenarios are part of the Pro analysis.
What the business depends on
- Brand strength allows pricing power and stable market shares in categories with regular repurchase.
- Product innovation and premiumization increase the value per unit sold and support margins.
- Economies of scale in procurement, production and distribution as well as ongoing efficiency programs influence profitability.
Risks
- Rising raw material, packaging and transport costs can weigh on margins if they cannot be passed on.
- Retailer private labels and price-conscious consumers put brands under pressure and weaken pricing power.
- Currency fluctuations and geopolitical risks affect reported revenue and earnings because of the global footprint.
What to look for with Procter & Gamble
The operating margin together with organic sales growth shows whether pricing and sales volumes offset cost developments and whether brand strength holds up against competition.