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  • Procter And Gamble Stock Analysis | PG Stock Analysis


Justin (00:00):  In this video, I will give you a detailed breakdown of the Procter and Gamble stock, and I will provide you with my analysis and a 12-month price prediction on the Procter & Gamble stock. If you're not familiar with Procter & Gamble, they provide branded consumer goods to people across the world. And these products include brands like Gillette, Pampers, Oral B, Vicks and many others. They trade under the stock ticker PG. Before we continue, please do me a huge favour and hit the like button below this video now. This helps me rank these videos on YouTube, and every single like really does help me. So please, please click on that like button now.

(00:41): Right, so let's jump into the stock analysis quickly. Let’s take a look at what's going on. So, Procter & Gamble currently trading at 13309 on the last market close current market cap of 327.73 billion. And also something I like to go and have a look at. If you guys have been watching my videos up until this point, I want to go and have a look at the last 10 years and just sort of see where the price was 10 years ago. Ideally, I'm looking for a stock that has doubled in value over the last decade. So, if we go back to 2010, thereabouts, we’re looking at $59, give or take, we're currently sitting at 133. So, that's an excellent sign. Here at Yahoo Finance, I like to use the Statistics tab. And this gives you a perfect summary. You can see the market cap, and you can see the trailing P. E. ratio. Current P. E. ratio sitting in a trailing P. E. is sitting at 25, forward P. E. sitting at 21. It's within a decent range. There’s a little bit of market sentiment driving the market, but not too much. I think overall, the market at the moment is very sentiment driven. So, you know to find P. E. scores in the sort of 20 range is an excellent indication that the company itself is not being over traded. So that's an excellent sign. And also, if we go down and look at the profit margin, 18.72% is a really good healthy sign. And then if we go and have a look at the dividend payout, we're sitting on a dividend pay-out here of 2.39%. So, really good. These are all good signs. 

(02: 25): The next thing I like to do is go and look at the financials, and specifically, I like to jump into the balance sheet almost immediately. The big thing I'm looking for is that the assets are more significant than liabilities and decent equity within the company. So, as we can see 12 700 on assets, liabilities is 73 800, Leaving equity of 46 800. So, all really, really good signs, no issues there. Next, what I like to do is go and have a look at the income statement. Specifically, what we're looking for here is year on year growth, precisely a three-year period. It’s always an excellent sign if a company has got three years of continuous growth. So, looking at total revenue, we’ve gone from 67 684 to 70 950 and then 73 975, so that's a good sign. Pretty much the same thing on the cost of revenue, and gross profit pretty much the same. And obviously, net profits looking pretty much the same. So all showing a good consecutive order over three years. 

(03:33): The next thing I like to look at is a fundamental calculation that I look at. Under the cash flow, I'm looking at operating cash flow, so this is money generated from operations. This has nothing to do with financing. It’s got nothing to do with anything external other than the core business. And so, we look at operating cash flow. Then we’re having a look at capital expenditure. And what is left is what is known as free cash flow. So this is the cash flow, or as I like to call it, cash equity, that's available. And so, what we want to see is a consistent pattern there at least over the last three years of growth, and we seeing that year 19 less 2, 17 less 3, 15 less 3 which are all good signs, no complaints there. If we head over to my share spreadsheet, which I use to value stocks, I have a scoring system out of 12. I'm looking for a P. E. ratio below 20. Unfortunately, based on the current market segment, not checking that box. Profit margin more significant than 10%. Assets greater than liabilities, yes, that is checked. Total revenue, growth profit, and operating income, there's been a little bit of inconsistency in some of the stats in the last year, and that's understandable because of the pandemic. But unfortunately, based on my scoring system, I have to score them down and say that they haven't met the criteria. 

(05:03): Next, I'm looking at cash from operating activities, up more than three years. Absolutely free cash flow up more in three years, absolutely. It means, despite the pandemic despite a bit of volatility in their trading, what they have been able to do is they've been able to rope themselves in on capital expenditure and making sure that they have free cash flow available. So, it's an excellent sign. It means that the company’s management is really focusing on the things they need to be doing. I also like to have a look at the number of shares outstanding. It’s an excellent sign if a company is buying back its own shares. That usually means that they have confidence in themselves. They have confidence in the products that they’re distributing. And so, in this instance, they have been reducing their outstanding shares. There have been buybacks going on, and the number of outstanding shares has gone down, which is a really good sign. The next thing I like to look at is the actual cost of dividend to the company. So, what we do is we take the market cap, which is 327.73. The dividend yield is 2.39%, and we figure out that they've had to pay out 7.83 billion, based on dividend yield to market cap. 

(06:14): Then what we want to look at is make sure that the amount of money they are paying out on the dividend is lower than their free cash flow. Because, obviously, if they are paying out more than their free cash flow, that means they're servicing the dividends with debt. And this often happens with companies during times of recession, during times of retraction, and they don't really want to, you know, do away with the dividend. And they want to retain their investors. So, in this example, with Procter and Gamble currently, their free cash flow is sitting at 14.23 billion. They had a dividend payout of 7.83 billion, so they more than double have free cashflow available than what they're paying out in dividends. So really, really healthy sign. Based on the score criteria here, out of 12, they’re scoring a 61% buy. They’re scoring a 30% sell. So, if you are currently holding Procter and Gamble, my advice is to hold the stock. Keep holding the stock and stay with it long term; if we look at the last decade, it's performed well, and I'm very confident that it will be doing the same over the next decade. This certainly isn't a growth stock, but because it is one of those aristocrat shares that pay out a dividend, it definitely has to be a stock that you need to consider in your portfolio. 

(07:37): I want to say that if you are looking at buying into Procter and Gamble, I would say that their price is probably a little bit undervalued at the moment. Based on current market situations, I think it's probably a healthy thing to buy and do some dollar-cost averaging, so you know, maybe buy some shares this month buy some shares next month. And, you know, rather than trying to get the ideal price, just do some dollar-cost averaging. Industry projected costs over the next 12 months is $153. A share my personal prediction, I think we're going to sit at about 155, purely because they're very much in the consumer goods space. Based on the current pandemic, based on shipping lines being highly congested at the moment, it's more challenging to get the product out there, so I'm not putting a high growth target on this. So, I think 155 In the next 12 months is probably reasonable. 

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David Bester
Justin Harrison