Global disadvantages and risks:
There are no significant problems in the financial health of the company. The main negative factor for Procter shares & Gamble is common problems in the American economy, as well as the debt burden and the consequences of widespread insider sales over the past 3 months. The level of net debt of $ 33.669 billion to the size of equity of $ 45.746 billion is high and is about 73%. This ratio has grown over the past 5 years from 55.8% to 73.6%. The company's current net profit is 18%, which is lower than last year (18.6%). Earnings per share (EPS) are expected to decrease to $ 5,841 at the end of June this year. According to 14 analysts from 13.05.2022, the possible range is from $ 5,780 to $ 5,880. The price/earnings ratio (P/E) is 25.8x, which is higher than in the industry, where the average value of the indicator is 22x, and in the US market - 14.9x. Despite some negative aspects, there are no events causing concern.
The company is currently profitable. Profit is projected to grow by an average of 5.3% per year over the next 3 years. Profit grew by 2.7% over the past year and exceeded revenue growth for the household goods industry by 7.7%. The return on equity (ROE) was 32%, which is higher than the industry average of 20.5%. By the end of the 2nd quarter, revenue is expected to grow to $ 80.184 billion, and net income to $ 14.842 billion. It is assumed that the growth of return on equity will be 37.9% in the next 3 years against the industry average of 20.5%. The company's debt is well covered by operating cash flow of 50.9% and is offset by EBIT coverage of 47.1 times. A plus for the company's shares is also the fact that they belong to the so-called protective ones, which manage to grow even during economic shocks.
Distribution of 22 analysts' recommendations on the company's shares: 2 worse than the market; 10 to hold; 4 to buy; 6 to actively buy. The overall rating of recommendations for the company 2.4 is shifted towards buy. The company's shares are undervalued.
Key financial indicators:
Market capitalization - $ 354.209 billion;
Revenue for the last 12 months (TTM) - $ 79.618 billion;
Net profit for the last 12 months (TTM) - $ 14.596 billion;
PEG 12 months (TTM) - 4.60;
P/E 12 months (TTM) - 25.80;
EPS 12 months (TTM) - 5.72;
Free Cash Flow (FCF) - $ 13.953 billion;
Dividend per share (%) - 2.52;
Dividend per share ($) - 3.65;
Ex-dividend date - 21.04.2022;
The next dividend payment date is 29.07.2022.
The paper is trading in a slightly decreasing downward trend above the support level of 141.75. At the same time, the price is below the average line of the Bollinger indicator on the daily chart. The MACD indicator shows a local upward reversal. The relative strength index (RSI) is steadily growing, having left the oversold zone.
The paper is trading below the 50 and 100 daily moving averages. The company's shares rose in the regular trading session on Tuesday by 1.78%, to 147.63. On the premarket, the paper is down by 0.39%, to 147.06.
Likely target levels:
The 1st target is 150.40 (short-term) from the closing price of 147.63 (expected yield of 1.84%);
2nd goal - 156.25 (expected yield of 5.51%);
The 3rd goal is 163.00 (expected yield of 9.42%).
We believe that the shares of Procter & Gamble have a promising growth potential within the formed trend. The probable investment horizon for the 3rd goal is from 2 weeks to 1 month.