New Value Analysis of The Procter & Gamble Company (NYSE:PG) 2020

Published by Jonathan Taylor at 19th July 2020

New Value Analysis of The Procter & Gamble Company (NYSE:PG) 2020

A new value analysis of The Procter & Gamble Company (NYSE:PG), a company listed on the NYSE, has been added to our research pages here. Procter & Gamble is a global consumer products producer. Procter & Gamble make products for brushing teeth, washing hair, showering, shaving,caring for the baby, cleaning the house, doing the dishes and the laundry.

In the previous analyses of PG on this site we have warned about purchasing PG at a too high earnings multiple. Buying PG at an earnings multiple over 21 limits the possibility for short-term capital appreciation. Long-term shareholders with a desire for income can purchase PG with an earnings multiple over 21. Long-term shareholders can also expect some capital appreciation over the long-term, but may have to wait a number of years before seeing any real capital growth.

The assessment of price to earnings is particularly tricky right now as PG decided to impair two significant assets. When a company recognises an impairment, it reduces the value of the company’s assets and also reduces reported earnings. Right now, a comparison between reported earnings and price makes PG look very expensive.

PG management use a number referred to as ‘core earnings’ in the PG Annual Report as a longer-term measure of earnings, which excludes any exceptional items. Using core earnings makes PG look more reasonably priced.

PG is just about to release its Annual Report for 2020, which covers the year up to 30 June 2020. If earnings are roughly in line with current expectations, which means a small increase in ‘core earnings’ there is is nothing in the current analysis, which will become irrelevant after the release of the 2020 Annual Report.

You can see how weill PG has been trading in the current environment in the chart below.

To find out why a value investor would consider an investment in The Procter & Gamble Company common stock click here to download the new analysis.

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