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Category: Stock Market and Procter & Gamble
Date: 27 January 2020 Stock Price: $126.04 We take a look at the latest earnings report for the 2nd quarter of their 2020 fiscal year of Procter & Gamble a company that serves consumers with global leading brands such as Ariel, Gillette and Pampers. The group has raised its fiscal guidance for fiscal 2020.
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About Procter & Gamble
P&G serves consumers around the world with one of the strongest portfolios of trusted, quality, leadership brands, including Always®, Ambi Pur®, Ariel®, Bounty®, Charmin®, Crest®, Dawn®, Downy®, Fairy®, Febreze®, Gain®, Gillette®, Head & Shoulders®, Lenor®, Olay®, Oral-B®, Pampers®, Pantene®, SK-II®, Tide®, Vicks®, and Whisper®. The P&G community includes operations in approximately 70 countries worldwide
Overview of Procter & Gamble's 2nd quarter 2020 earnings report
The numbers below refers to the latest quarter unless specified otherwise
- Net sales: $18.240 billion (up from $17.438 billion for the same quarter of the previous year)
- Net sales increased by 5% over the last 12 months
- Cost of products sold: $8.869 billion (down from $8.919 billion for the same quarter of the previous year)
- Cost of products sold decreased by -1% over the last 12 months
- Net Income: $3.717 billion (up from $3.194 billion for the same quarter of the previous year)
- Diluted earnings per share: $1.41 (up from $1.22 for the same quarter of the previous year)
- PE ratio of Procter and Gamble: 22.5
- PE ratio of Procter and Gamble: 22.5
- Dividend declared: $0.7459
- Dividend yield of Procter and Gamble: 2.4%
- Dividend yield of Procter and Gamble: 2.4%
- Weighted average number of shares - diluted: 2.630 billion (up from 2.623 billion for the same quarter of the previous year)
- Cash and cash equivalents: $6.279 billion
- Cash and cash equivalents per share: $2.38
- Cash and cash equivalents makes up 1.89% of Procter & Gamble's market capital
- Cash and cash equivalents makes up 5.62% of Procter & Gamble's total assets
- Inventories: $5.521 billion
- Inventories makes up 4.94% of Procter & Gamble's total assets
- Procter & Gamble inventories increased by 10.04% over the last 12 months
- Goodwill: $39.998 billion
- Goodwill per share: $15.20
- So essentially 12.1% of Procter & Gamble's stock price is made up by goodwill
- Goodwill makes up 35.8% of Procter & Gamble's total assets
- Basically the group is saying that their brand names are worth $39.998 billion, or $15.20 per share
- Stockholders' equity in Procter & Gamble : $45.908 billion
- Stockholders equity per share: $17.45
- So Procter & Gamble is trading at 7.24 times its stockholders equity per share, which is well outside the expected range of between 2 and 4 times that most firms tend to trade at.
- Cash generated from operations for the 2 quarters of the fiscal year: $8.533 billion
- Cash generated from operations per share for the 2 quarters of the fiscal year: $3.24
Procter & Gamble's management commentary on their latest earnings and fiscal guidance
CINCINNATI--(BUSINESS WIRE)-- The Procter & Gamble Company (NYSE:PG) reported second quarter fiscal year 2020 net sales of $18.2 billion, an increase of five percent versus the prior year. Excluding the net impacts of foreign exchange, acquisitions and divestitures, organic sales also increased five percent. Diluted net earnings per share were $1.41, up 16% versus the prior year. Core earnings per share increased 14% to $1.42. Currency-neutral core EPS increased 15% versus the prior year.
“We delivered another strong quarter of organic sales growth, core earnings per share and cash returned to shareowners,” said David Taylor, Chairman, President and Chief Executive Officer. “Our strong first half results enable us to further increase our outlook for the full fiscal year across each of these metrics and to increase our commitment of cash return to shareowners. Our focus remains on executing our strategies of superiority, productivity, constructive disruption and improving P&G’s organization and culture to deliver balanced top-line and bottom-line growth along with strong cash generation in a challenging competitive and macroeconomic environment.”
Fiscal Year 2020 Guidance
The Company raised its outlook for fiscal 2020 all-in sales growth from a range of three to five percent to a range of four to five percent growth versus the prior fiscal year. This estimate includes a modest negative impact from foreign exchange, largely offset by a modest positive impact from acquisitions and divestitures. The Company increased its guidance for organic sales growth from a range of three to five percent to a range of four to five percent.
The Company increased its guidance range for fiscal 2020 all-in GAAP diluted net earnings per share growth to 235% to 245%, noting that the comparison period is significantly depressed by the Gillette Shave Care impairment charges in fiscal 2019. P&G raised its fiscal 2020 guidance for core earnings per share growth from a range of five to ten percent to a range of eight to eleven percent versus fiscal 2019.
The Company is not able to reconcile its forward-looking non-GAAP adjusted free cash flow productivity measure without unreasonable efforts because the Company cannot predict the timing and amounts of discrete cash items, such as acquisitions, divestitures, or impairments, which could significantly impact GAAP results. The Company increased its estimate for fiscal 2020 adjusted free cash flow productivity from 95% to 100%.
The Company now expects to pay over $7.5 billion in dividends and repurchase $7 billion to $8 billion of common shares in fiscal 2020. This compares to prior guidance of over $7.5 billion in dividends and $6 billion to $8 billion of common share repurchases.
Fiscal Year 2020 Guidance
The Company raised its outlook for fiscal 2020 all-in sales growth from a range of three to five percent to a range of four to five percent growth versus the prior fiscal year. This estimate includes a modest negative impact from foreign exchange, largely offset by a modest positive impact from acquisitions and divestitures. The Company increased its guidance for organic sales growth from a range of three to five percent to a range of four to five percent.
The Company increased its guidance range for fiscal 2020 all-in GAAP diluted net earnings per share growth to 235% to 245%, noting that the comparison period is significantly depressed by the Gillette Shave Care impairment charges in fiscal 2019. P&G raised its fiscal 2020 guidance for core earnings per share growth from a range of five to ten percent to a range of eight to eleven percent versus fiscal 2019.
The Company is not able to reconcile its forward-looking non-GAAP adjusted free cash flow productivity measure without unreasonable efforts because the Company cannot predict the timing and amounts of discrete cash items, such as acquisitions, divestitures, or impairments, which could significantly impact GAAP results. The Company increased its estimate for fiscal 2020 adjusted free cash flow productivity from 95% to 100%.
The Company now expects to pay over $7.5 billion in dividends and repurchase $7 billion to $8 billion of common shares in fiscal 2020. This compares to prior guidance of over $7.5 billion in dividends and $6 billion to $8 billion of common share repurchases.
Procter & Gamble (NYSE: PG) stock price history
The image below obtained from Google shows the stock price history of Procter & Gamble (NYSE: PG) for the last 5 years. 5 years ago the stock of Procter & Gamble was trading at around $84.30 and its currently trading at $126.10 a stock. That's a return of 49.6% provided to Procter & Gamble stockholders over the last 5 years.
The stock of Procter & Gamble is trading at a lot closer to its 52 week high of $127 than it is to its 52 week low of $92.97, which to us is a clear indication that the short term sentiment and momentum of Procter & Gamble's stock is positive.
The stock of Procter & Gamble is trading at a lot closer to its 52 week high of $127 than it is to its 52 week low of $92.97, which to us is a clear indication that the short term sentiment and momentum of Procter & Gamble's stock is positive.
Recent coverage of Procter & Gamble
The extract regarding the latest earnings report from Procter & Gamble was obtained from TheStreet.com
Procter & Gamble (PG) - Get Report shares are under a bit of pressure on Thursday after the consumer-products icon reported fiscal-second-quarter earnings. Earnings of $1.42 per share came in 5 cents ahead of estimates. But revenue of $18.24 billion, up 4.6% from a year earlier, missed analysts’ expectations by $130 million.
Gross margin came in ahead of expectations, while management’s full-year outlook was mostly in line with estimates. It was a not great but not bad quarter. That’s likely why we’re seeing a tepid response in the stock price, particularly as P&G stock flirts with a move to all-time highs. Was the report good enough to send it to new highs? Evidently not. But even though momentum is waning, I don’t know that the quarter was bad enough to break its trend
Read the full article here
Procter & Gamble (PG) - Get Report shares are under a bit of pressure on Thursday after the consumer-products icon reported fiscal-second-quarter earnings. Earnings of $1.42 per share came in 5 cents ahead of estimates. But revenue of $18.24 billion, up 4.6% from a year earlier, missed analysts’ expectations by $130 million.
Gross margin came in ahead of expectations, while management’s full-year outlook was mostly in line with estimates. It was a not great but not bad quarter. That’s likely why we’re seeing a tepid response in the stock price, particularly as P&G stock flirts with a move to all-time highs. Was the report good enough to send it to new highs? Evidently not. But even though momentum is waning, I don’t know that the quarter was bad enough to break its trend
Read the full article here
Procter & Gamble (NYSE: PG) stock valuation
Based on Procter & Gamble's latest earnings report what do we value their stock at? Based on Procter & Gamble's earnings reported our valuation model provides a target (full value) price at $118.40 per Procter & Gamble stock (up from our 1st quarter 2020 earnings report valuation of Procter & Gamble). We therefore believe that the stock of Procter & Gamble is slightly overvalued.
We usually recommend long term fundamental or value investors look to enter a stock at least 10% below our target (full value) price which in this case is $118.40. We therefore believe a good entry point into Procter & Gamble's stock is at $106.60 or below. We expect the stock price of Procter & Gamble's to pull back slightly in coming weeks and months to levels closer to our target price (full value price) price of $118.40
We usually recommend long term fundamental or value investors look to enter a stock at least 10% below our target (full value) price which in this case is $118.40. We therefore believe a good entry point into Procter & Gamble's stock is at $106.60 or below. We expect the stock price of Procter & Gamble's to pull back slightly in coming weeks and months to levels closer to our target price (full value price) price of $118.40
Next earnings release of Procter & Gamble
It is expected that Procter & Gamble will release their Q3, 2020 earnings report in late April 2020