The Procter & Gamble Company

Date: March 12, 2024.

Company’s Overview

The Procter & Gamble Company (PG), a household name globally, sells everyday essentials from shampoos to healthcare products. Headquartered in Cincinnati, their diverse brands, like Tide and Pampers, cater to families worldwide, keeping homes clean and lives healthy.

Competition

Revenue Segments

The Company’s net sales proportions by segment for the most recent quarterly report are composed by:

Related Risks

While P&G’s name might bring to mind clean clothes and fresh scents, their journey isn’t without obstacles. Economic downturns, fierce competition, and rising costs for materials can all impact their bottom line. Additionally, changing consumer preferences towards sustainable alternatives could threaten the demand for their traditional products.

Beyond industry-wide concerns, P&G faces company-specific challenges. Product recalls can damage their reputation, while supply chain disruptions and currency fluctuations can hinder operations and profitability. Regulatory changes and cybersecurity threats add to the complexity.

Financial Analysis

Company’s Revenues

Revenues from 2021 to last quarter report:

• Procter & Gamble revenue for the quarter ending December 31, 2023 was $21.441B, a 3.22% increase year-over-year.
• Procter & Gamble revenue for the twelve months ending December 31, 2023 was $83.933B, a 4.55% increase year-over-year.
• Procter & Gamble annual revenue for 2023 was $82.006B, a 2.27% increase from 2022.
• Procter & Gamble annual revenue for 2022 was $80.187B, a 5.35% increase from 2021.
• Procter & Gamble annual revenue for 2021 was $76.118B, a 7.28% increase from 2020.

The yearly revenue from 2010 till 2023 is:

**The 2024 and 2025 values are the expected by the analysts

Company’s Net Income

Net Income from 2020 to last quarter report:

• Procter & Gamble net income for the quarter ending December 31, 2023 was $3.398B, a 12.04% decline year-over-year.
• Procter & Gamble net income for the twelve months ending December 31, 2023 was $14.488B, a 3.51% increase year-over-year.
• Procter & Gamble annual net income for 2023 was $14.371B, a 0.62% decline from 2022.
• Procter & Gamble annual net income for 2022 was $14.461B, a 3.04% increase from 2021.
• Procter & Gamble annual net income for 2021 was $14.035B, a 9.96% increase from 2020.

The yearly net income from 2010 till 2023 is:

**The 2024 and 2025 values are the expected by the analysts

Company’s EPS

EPS from 2021 to last quarter report:

• Procter & Gamble EPS for the quarter ending December 31, 2023 was $1.40, a 11.95% decline year-over-year.
• Procter & Gamble EPS for the twelve months ending December 31, 2023 was $5.97, a 4.74% increase year-over-year.
• Procter & Gamble 2023 annual EPS was $5.9, a 1.55% increase from 2022.
• Procter & Gamble 2022 annual EPS was $5.81, a 5.64% increase from 2021.
• Procter & Gamble 2021 annual EPS was $5.5, a 10.89% increase from 2020.

Company’s Free Cash Flow

Free Cash Flow from 2021 to 2023:

• Procter & Gamble annual free cash flow for 2023 was $13.832B, a 1.13% increase from 2022.
• Procter & Gamble annual free cash flow for 2022 was $13.677B, a 12.47% decline from 2021.
• Procter & Gamble annual free cash flow for 2021 was $15.626B, a 8.82% increase from 2020.

The yearly free cash flow from 2010 till 2023 is:

**The 2024 and 2025 values are the expected by the analysts

Shares Outstanding

In accordance with the repurchase program announced on July 28, 2023, the Company reaffirmed in its earnings release on January 23, 2024, that it expects to reduce outstanding shares through direct share repurchases at a value of $5 to $6 billion in fiscal year 2024

Asset/Liabilities & Current Ratio

Procter & Gamble’s asset-to-liability ratio of 1.68 suggests a somewhat comfortable financial position. This means they have enough assets to cover their liabilities by a more than adequate margin.

On the other hand, the current ratio of 0.64 raises a concern. This ratio measures the company’s ability to meet its short-term obligations (debts due within a year) using its short-term assets (cash, receivables, etc.). This could potentially limit their operational flexibility and raise questions about their short-term liquidity.

Valuation

Based on DCF analysis, PG’s stock price is fairly valued. Note that in the analysis we take into consideration also the cash and cash equivalents and the total debt.

Analysts have a mildly positive outlook on PG. The consensus rating is Overweight, with a mean price target forecast of $172.13 (approximately 8% above the current price).

Procter & Gamble is a consumer goods giant that consistently delivers for its investors. Their track record of rising revenue, dividends, and overall financial performance is impressive. This translates into strong returns for those who have invested in the company.

However, a minor yellow flag waves with their current ratio dipping below 1. This indicates P&G might have limited readily available resources to meet all their short-term obligations in the near future.

While this is a concern, P&G’s overall strength suggests they’re well-positioned to navigate this and continue delivering value to their shareholders.

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Disclaimer

Please note that I am not a licensed financial advisor and the information provided here should not be construed as financial advice. I am simply sharing my understanding of the topics based on my research and personal experiences. It is always advisable to consult with a qualified financial advisor before making any investment decisions.

The information I provide is based on publicly available sources and my own interpretations. I strive to provide accurate and up-to-date information, but I cannot guarantee the correctness or completeness of the information.

Any opinions expressed here are my own and do not necessarily reflect the views of any other individual or organisation.

Please use your own judgement and conduct your own research before making any investment decisions.