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Category: Stock Market and Procter & Gamble
Date: 18 April 2020 Stock Price: $124.69 We take a look at the latest earnings report for the 3rd 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's stock has held up remarkably well considering the global stock market sell off earlier in the year
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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 3rd quarter 2020 earnings report
The numbers below refers to the latest quarter unless specified otherwise
- Net sales: $17.214 billion (up from $16.462 billion for the same quarter of the previous year)
- Net sales increased by 5% over the last 12 months
- Cost of products sold: $8.716 billion (down from $8.427 billion for the same quarter of the previous year)
- Cost of products sold increased by 3% over the last 12 months
- Net Income: $2.917 billion (up from $2.745 billion for the same quarter of the previous year)
- Diluted earnings per share: $1.12 (up from $1.04 for the same quarter of the previous year)
- PE ratio of Procter and Gamble: 27.8
- Dividend declared: $0.7459
- Dividend yield of Procter and Gamble: 2.4%
- Weighted average number of shares - diluted: 2.613 billion (up from 2.637 billion for the same quarter of the previous year)
- Cash and cash equivalents: $15.393 billion
- Cash and cash equivalents per share: $5.89
- Cash and cash equivalents makes up 4.7% of Procter & Gamble's market capital
- Cash and cash equivalents makes up 12.9% of Procter & Gamble's total assets
- Inventories: $5.330 billion
- Inventories makes up 4.49% of Procter & Gamble's total assets
- Procter & Gamble inventories increased by 6.2% over the last 12 months
- Goodwill: $39.671 billion
- Goodwill per share: $15.18
- So essentially 12.2% of Procter & Gamble's stock price is made up by goodwill
- Goodwill makes up 35.4% of Procter & Gamble's total assets
- Basically the group is saying that their brand names are worth $39.617 billion, or $15.18 per share
- Stockholders' equity in Procter & Gamble : $45.941 billion
- Stockholders equity per share: $17.58
- So Procter & Gamble is trading at 7.1 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.
- For perspective the S&P 500 is trading at a book value of 3.34. Read more about the S&P500 here.
- Cash generated from operations for the 3 quarters of the fiscal year: $12.597 billion
- Cash generated from operations per share for the 3 quarters of the fiscal year: $4.82
Procter & Gamble's management commentary on their 3rd quarter 2020 earnings report
CINCINNATI--(BUSINESS WIRE)-- The Procter & Gamble Company (NYSE:PG) reported third quarter fiscal year 2020 net sales of $17.2 billion, an increase of five percent versus the prior year. Excluding the net impacts of foreign exchange, acquisitions and divestitures, organic sales increased six percent. Diluted net earnings per share were $1.12, an eight percent increase versus the prior year. Core earnings per share increased 10% to $1.17. Currency-neutral core EPS increased 15% versus the prior year.
Operating cash flow was $4.1 billion for the quarter. Free cash flow productivity was 113%. The Company returned $2.8 billion of cash to shareholders through $1.9 billion in dividend payments and $900 million of common stock repurchases in the third quarter. Over the last 10 years, P&G has returned over $120 billion to shareholders in cash dividends and stock repurchase. Earlier this week, P&G announced a 6% increase in the quarterly dividend, marking the 64th consecutive year the Company has increased its dividend. P&G has been paying a dividend for 130 consecutive years, since its incorporation in 1890.
“The strong results we delivered this quarter are a direct reflection of the integral role our products play in meeting the daily health, hygiene and cleaning needs of consumers around the world,” said David Taylor, Chairman, President and Chief Executive Officer. “Our organization has been doing a terrific job against our near-term priorities – protecting the health and safety of each other, maximizing availability of P&G products to meet heightened consumer need and helping society meet and overcome the challenges of this crisis.”
Operating cash flow was $4.1 billion for the quarter. Free cash flow productivity was 113%. The Company returned $2.8 billion of cash to shareholders through $1.9 billion in dividend payments and $900 million of common stock repurchases in the third quarter. Over the last 10 years, P&G has returned over $120 billion to shareholders in cash dividends and stock repurchase. Earlier this week, P&G announced a 6% increase in the quarterly dividend, marking the 64th consecutive year the Company has increased its dividend. P&G has been paying a dividend for 130 consecutive years, since its incorporation in 1890.
“The strong results we delivered this quarter are a direct reflection of the integral role our products play in meeting the daily health, hygiene and cleaning needs of consumers around the world,” said David Taylor, Chairman, President and Chief Executive Officer. “Our organization has been doing a terrific job against our near-term priorities – protecting the health and safety of each other, maximizing availability of P&G products to meet heightened consumer need and helping society meet and overcome the challenges of this crisis.”
Fiscal Year 2020 Guidance
The Company adjusted its outlook for fiscal 2020 all-in sales growth, from a range of four to five percent growth to a range of three to four percent growth versus the prior year, to reflect stronger headwinds from foreign exchange. The revised growth estimate includes a negative two percentage point impact from foreign exchange, partially offset by a modest positive impact from acquisitions and divestitures. The Company maintained its guidance for organic sales growth in the range of four to five percent.
The Company maintained its guidance range for fiscal 2020 all-in GAAP diluted net earnings per share growth at 235% to 245%, noting that the comparison period is significantly depressed by the Gillette Shave Care impairment charges in fiscal 2019. P&G also maintained its fiscal 2020 guidance for core earnings per share growth at the range of eight to eleven percent growth versus fiscal 2019.
The Company is not able to reconcile its forward-looking non-GAAP cash flow 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 maintained its estimate for fiscal 2020 adjusted free cash flow productivity at 100%.The Company expects to pay over $7.5 billion in dividends and repurchase $7 billion to $8 billion of common shares in fiscal 2020.
The Company adjusted its outlook for fiscal 2020 all-in sales growth, from a range of four to five percent growth to a range of three to four percent growth versus the prior year, to reflect stronger headwinds from foreign exchange. The revised growth estimate includes a negative two percentage point impact from foreign exchange, partially offset by a modest positive impact from acquisitions and divestitures. The Company maintained its guidance for organic sales growth in the range of four to five percent.
The Company maintained its guidance range for fiscal 2020 all-in GAAP diluted net earnings per share growth at 235% to 245%, noting that the comparison period is significantly depressed by the Gillette Shave Care impairment charges in fiscal 2019. P&G also maintained its fiscal 2020 guidance for core earnings per share growth at the range of eight to eleven percent growth versus fiscal 2019.
The Company is not able to reconcile its forward-looking non-GAAP cash flow 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 maintained its estimate for fiscal 2020 adjusted free cash flow productivity at 100%.The Company expects to pay over $7.5 billion in dividends and repurchase $7 billion to $8 billion of common shares in fiscal 2020.
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 $81 and its currently trading at $124.69 a stock. That's a return of 53.9% 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 $128.09 than it is to its 52 week low of $94.34 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 $128.09 than it is to its 52 week low of $94.34 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) posted stronger-than-expected third quarter earnings Friday, but trimmed its sales growth forecast amid the impact of a stronger U.S. dollar. Procter & Gamble said core earnings for the three months ending in March, its fiscal third quarter, were pegged at $1.17 per share, a 10.4% increase from the same period last year and 6 cents ahead of the Street consensus forecast.
Group net sales, Procter & Gamble said, rose 4.5% to $17.2 billion as customers stocked-up on basic household items such as toilet paper, diapers and paper towels amid the early stages of the coronavirus pandemic but came in just shy of analysts' estimates of a 17.4 billion tally. For the current fiscal year, P&G maintained its earnings growth forecast of between 8% and 11% but noted that stronger currency headwinds would keep all-in sales growth in the 3% to 4% range, a 1% reduction from its prior estimate.
“The strong results we delivered this quarter are a direct reflection of the integral role our products play in meeting the daily health, hygiene and cleaning needs of consumers around the world,” said CEO David Taylor. “Our organization has been doing a terrific job against our near-term priorities – protecting the health and safety of each other, maximizing availability of P&G products to meet heightened consumer need and helping society meet and overcome the challenges of this crisis.” Procter & Gamble shares were marked 0.85% higher in early trading following the earnings release to change hands at $122.44 each.
Earlier this week, Procter & Gamble boosted its quarterly dividend by 6%, to 79.07 cents per share, marking the 130th consecutive year that the group has paid a dividend since its incorporation in 1890.
Read the full article here
Procter & Gamble (PG) posted stronger-than-expected third quarter earnings Friday, but trimmed its sales growth forecast amid the impact of a stronger U.S. dollar. Procter & Gamble said core earnings for the three months ending in March, its fiscal third quarter, were pegged at $1.17 per share, a 10.4% increase from the same period last year and 6 cents ahead of the Street consensus forecast.
Group net sales, Procter & Gamble said, rose 4.5% to $17.2 billion as customers stocked-up on basic household items such as toilet paper, diapers and paper towels amid the early stages of the coronavirus pandemic but came in just shy of analysts' estimates of a 17.4 billion tally. For the current fiscal year, P&G maintained its earnings growth forecast of between 8% and 11% but noted that stronger currency headwinds would keep all-in sales growth in the 3% to 4% range, a 1% reduction from its prior estimate.
“The strong results we delivered this quarter are a direct reflection of the integral role our products play in meeting the daily health, hygiene and cleaning needs of consumers around the world,” said CEO David Taylor. “Our organization has been doing a terrific job against our near-term priorities – protecting the health and safety of each other, maximizing availability of P&G products to meet heightened consumer need and helping society meet and overcome the challenges of this crisis.” Procter & Gamble shares were marked 0.85% higher in early trading following the earnings release to change hands at $122.44 each.
Earlier this week, Procter & Gamble boosted its quarterly dividend by 6%, to 79.07 cents per share, marking the 130th consecutive year that the group has paid a dividend since its incorporation in 1890.
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 price (full value price) at $111.20 per Procter & Gamble stock (up from our 2nd 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 $111.20. We therefore believe a good entry point into Procter & Gamble's stock is at $100 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 $111.20
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 $111.20. We therefore believe a good entry point into Procter & Gamble's stock is at $100 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 $111.20
Next earnings release of Procter & Gamble
It is expected that Procter & Gamble will release their Q4 and full fiscal 2020 earnings report in late July 2020