Company Profile
Proctor & Gamble is an American consumer goods company headquartered in Cincinnati and founded in 1837. As of mid-2010, it is the 5th most profitable corporation in the world [1] with revenues nearly $80 billion US in 2009. It is also the 4th largest US company by market capitalization, behind Exxon Mobil, Wal-Mart, and Apple. As well, it is rated in the top ten (7th) most admired companies by Forbes Magazine.
Line of Business
The average consumer may not know the name Proctor & Gamble simply because the company does not label their products under this name. But P&G has almost two-dozen brands that each generate billions of dollars in sales each year including Gillette, Head & Shoulders shampoo, Pringles potato chips, Duracell batteries, Crest toothpaste, CoverGirl make-up, and Tide laundry detergent (A full list available on Wikipedia).
Financial Figures
As previously mentioned, Proctor & Gamble is the 5th largest profitable company in the world, earning almost $80 billion in revenue during the recession, with a net income exceeding $16 billion. P&G produces goods that are essential to every day life, therefore, its revenue streams are predictable and consistent, allowing the underlying security to lack volatility. The company has 140,000 employees world wide, making it one of the largest employers on the planet.
In their most recent quarter ended March 31, 2010, the company earned $2.5 billion in net income and revenues increased year-over-year by $1.3 billion. According to its balance sheet, the company has a debt ratio of 0.225, a ratio of debt to assets. Anything below 1 indicates it has less debt than assets, which is extremely good. The quick ratio is 0.633, used to determine its ability to pay off debt with its most liquid assets. Other key financial measurements are in the table below.
| Measurement | Number | Explanation on value |
| Current Ratio | 0.923 | Below 1 is bad |
| Debt Ratio | 0.225 | Below 1 is good |
| Quick Ratio | 0.633 | Higher the better |
| Acid-Test Ratio | 0.462 | Below 1 is bad |
| Inventory Turnover | 2.814 | Days required to sell all goods |
These financial measurements, along with another fifty, are often used to examine the financial health of a company, but each statistic can not be interpreted alone. One may make a poor assumption that P&G has trouble paying off debt analyzing just one ratio, but high inventory turnover indicates the company sells its entire inventory every 2.8 days which provides enough cash to pay off debt. Another reason these measurements are often inaccurate is that these figures are based on quarter-end results and does not typically represent the entire quarter or year, but are meant as a general guideline of a company's health.
Dividends
P&G has increased its dividend every year since it starting making dividend payments. In the last decade, the dividend has grown from 18 cents a quarter to 48 cents today, almost triple. Based on today's price, the yield is 3.15 per cent. The company says they are committed to dividend growth.
Analyst Ratings
- According to Thomson-Reuter's First Call, the company has a mean rating of 2.0 (buy). The table below is a breakdown of this rating.
| Thomson First Call (as of June 3, 2010) | |
| Sell | |
| Underperform | |
| Hold | |
| Buy | |
| Strong Buy | |
- As of May 29, 2010, the Standard & Poor rates P&G 4 stars out of 5.
- As of May 4, 2010, the Argus 12-month rating is a hold. The Argus 5-year rating is a buy.
Disclaimer
I do not own shares of P&G.
House hold and family members do not own shares of P&G.
I do not have a derivatives position in P&G.
House hold and family members do not have a derivatives in P&G.
Before investing in Proctor & Gamble, consult with your financial advisor and analyze your investment objectives.
2 comments:
never listen or trust those analyst rating....none were saying "SELL" in the years or months heading into the recession, now theyre still telling you to buy when the S&P 500 is trading at 20x earning which is well above its historical 16x earnings range.
Slowly pick away at stocks, don't jump in all at once. Volatility is back and that probably means we will see a sell off somewhere soon. Here's hoping!
Great comment Santa Claus. The market is very volatile and as always, use caution when buying.
Post a Comment