2023-04-28 10:11:11 ET
Proctor & Gamble ( NYSE: PG ) was among the list of companies that beat expectations this earnings season, providing an upbeat view of the consumer segment at an uncertain time. With worries about the economy, the consumer products maker provides an important indicator of the financial health of the average shopper.
Given the recent financial figures and the current economic conditions, does PG remain a buy?
PG’s Positive Earnings & Guidance
Shares of Procter & Gamble have climbed 3.8% since the owner of such brands as Tide, Crest and Charmin posted a positive earnings report last Friday.
Looking at the results, PG announced Q3 non-GAAP EPS of $1.37, which beat the market consensus by $0.05. At the same time, the firm delivered revenue of $20.07B, rising 3.5% from last year and exceeding expectations by $750M.
P&G also raised its guidance for sales growth and cash return. On the earnings front, the company maintained its fiscal year EPS growth guidance range.
The results were generally cheered by Wall Street. For example, after the company posted its earnings figures, Morgan Stanley came out and reiterated its bullish view on the company, maintaining its overweight stance on the firm.
Is PG a Buy?
Wall Street generally views Proctor & Gamble as a Buy. More than half of the 26 analysts surveyed by Seeking Alpha see the stock as either a Strong Buy or a Buy. Specifically, 13 rate PG as a Strong Buy and another 5 have issued a Buy recommendation. Meanwhile, 7 experts have designated the stock as Hold and 1 analyst believes the company is a Sell.
At the moment, Proctor & Gamble trades near the $156 level but the average price target has the stock reaching $163.75. The high-end target sees the consumer staple stalwart hitting $180, with the low-end target projecting a fall to $126.
Seeking Alpha's Quant Ratings have a more cautious view of the stock, with the system for grading quantitative measures labeling it as a Hold. This comes as PG gets a D- for valuation and a D for growth. On the other side of the spectrum, the stock gets an A+ and a B+ when looking at profitability and momentum, respectively.
See a breakdown below:
What Others Say
Seeking Alpha contributor Geoffrey Seiler believes PG is a Hold , stating: “PG should continue to benefit from being the market and innovation leader in the consumer products space. However, its current valuation is above historical levels, making it more of a Hold.”
Vladimir Dimitrov also thinks Procter & Gamble is a Hold . "Although Procter & Gamble is not among my favorite picks in consumer staples, the company does not deserve a sell rating," he said. "High-quality businesses, such as Procter & Gamble, almost always trade at premium multiples, and there are solid reasons for that."
Other Options
For investors that are unsure about Procter & Gamble, they can always access exposure to the company in a diversified way through the use of exchange traded funds. PG is owned by 315 funds. Listed below are the five funds that have the heaviest weightings towards the firm:
- iShares U.S. Consumer Staples ETF ( IYK ) at 15.56%.
- Consumer Staples Select Sector SPDR Fund ( XLP ) at 14.77%.
- Fidelity MSCI Consumer Staples Index ETF ( FSTA ) at 12.33%.
- Vanguard Consumer Staples ETF ( VDC ) at 12.26%.
- iShares Global Consumer Staples ETF ( KXI ) at 8.49%.
At the same time, investors can also look at some of PG's closest competitors, which includes the likes of Colgate-Palmolive ( CL ), Kimberly-Clark ( KMB ), Clorox ( CLX ), and Reckitt Benckiser Group ( OTCPK:RBGLY ).
In related news, ETFs focused on the Consumer Staples sector have tracked higher since the start of 2023, with some climbing to 4-month trading highs.
For further details see:
Does Proctor & Gamble’s earnings pop make the stock a buy?