The last time this site published a value analysis of Procter & Gamble was in March 2017. At the time I made the following observation.
The interesting element when analysing PG from a value perspective is considering whether the PG common stock will ever be for sale at a significantly low price. When looking at the price history you can find a relatively low price of $47 per share in 2009, but even at this low price the PE ratio would have been around 12 – 13 times. This would have been the only time in the 20 years when a value investor could have purchased PG for a relatively low earnings multiple.
In 2007 the price of PG peaked at around $70 and the PE ratio was around 23. Buying in 2007 would have been a painful decision for holders of the common stock unless the purchaser was really only interested in the income. The price of the common stock did not trade above $70 again until 2012.
The current PE (March 2017) is around 21, so there is some similarity to 2007 and this creates some risk for purchasers of the common stock at around the current price of $90. The yield in 2007 was around 2.9% so this is also similar to today.
A purchase around $90 will probably still work well for long-term investors and income investors would have had two increases in dividends since March 2017.
The price now is around $80 and PG looks much better value than March 2017. The March 2017 analysis was made using the data from the 2016 Annual Report. The analysis for the report referenced on this page uses the data form the 2018 Annual Report. Reported Earnings for 2018 are below 2016 and the P/E is also lower. This means that PG is better value now as it is trading at a lower earnings multiple and the earnings are slightly lower than 2016.
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