Procter & Gamble Q2 Earnings: Is PG Expensive at 72.1x Price/EPS?

in EARNINGS/INVESTING IDEAS by

The Procter & Gamble Company (NYSE:PG) is scheduled to report Q2 earnings results on January 23, 2020, before markets open for trading.

The company is expected to report earnings of $1.38/share on revenue of $18.329 billion. The consensus earnings per share (EPS) of $1.38/share is based on a poll of 18 analysts and represents a growth of 10.4% over the same quarter last year when the company reported earnings of $1.25/share.

The revenue forecast of $18.329 billion based on a poll of 13 analysts implies a year-over-year (YoY) growth of 5.1%. Last year the company reported $17.438 billion in revenue for the quarter.

Expected to report EPS growth of $0.13/share for Q2, 2019
Metric Expected Prior Year YoY Change
Revenue $18,329.28 $17,438.00 5.1%
EPS $1.38 $1.25 10.4%

Earnings Call Trends

Management has been great at managing analyst expectations historically. The company has a perfect record over the last 8 tracked quarters of exceeding earnings guidance.

What are your expectations from Procter & Gamble for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q1, 2020 $1.24 $1.37 10.2% Beat
Q4, 2019 $1.05 $1.10 4.8% Beat
Q3, 2019 $1.03 $1.06 3.1% Beat
Q2, 2019 $1.21 $1.25 3.2% Beat
Q1, 2019 $1.09 $1.12 2.8% Beat
Q4, 2018 $0.90 $0.94 4.5% Beat
Q3, 2018 $0.98 $1 1.7% Beat
Q2, 2018 $1.14 $1.19 4.4% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report.

After the last earnings report for the period ending September 30, 2019, the stock price reacted by increasing by 3.3%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
2019-10-22 $119.08 $123 3.3% Increase
2019-07-30 $116 $118.04 1.8% Increase
2019-04-23 $106.01 $103.69 -2.2% Decline
2019-01-23 $90.44 $94.30 4.3% Increase

Fundamentals And Technical Analysis

Procter & Gamble is currently trading at $126.09/share, down -0.3% for the day. The company is trading at approximately 99.3% of its 52-week high of $127/share. The company’s stock price is up 2.5% since the last earnings report and up 1.1% over the previous week.

The company’s 14 Day Relative Price Index (RSI) of 64.25 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.

NYSE:PG Stock Price Chart Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 72.1x and a forward P/E multiple of 24.2x. Procter & Gamble’s current share price also implies a price-to-book (P/B) multiple of 6.9x. The following table summarizes some other key fundamental ratios:

Data as of January 21, 2020
Metric Value
Last Fiscal Period FY2020.Q1
Period End Date September 30, 2019
Stock Price (Current) $126.09
P/E Ratio 72.1x
P/E Ratio (Fwd) 24.2x
PEG Ratio 5.7
Total Debt to Capital (%) 8.8%
Levered Free Cash Flow $12.498 billion
Enterprise Value / EBITDA 18.8x

Source: Finbox

Company Profile: The Procter & Gamble Company

The Procter & Gamble Company is a large-cap stock with a market capitalization of $315.2 billion and a total enterprise value of $337.7 billion. The company operates in the Consumer Staples sector and the Household Products industry.

The Procter & Gamble Company provides branded consumer packaged goods to consumers in North and Latin America, Europe, the Asia Pacific, Greater China, India, the Middle East, and Africa. It operates in five segments: Beauty; Grooming; Health Care; Fabric & Home Care; and Baby, Feminine & Family Care.

The Beauty segment offers conditioners, shampoos, styling aids, and treatments; and antiperspirants and deodorants, and personal cleansing and skincare products under the Head & Shoulders, Herbal Essences, Pantene, Rejoice, Olay, Old Spice, Safeguard, SK-II, and Secret brands. The Grooming segment provides female and male blades and razors, pre-shave and post-shave products, and other shave care products; and appliances that include electric shavers and epilators under the Braun, Gillette, and Venus brands.

The Health Care segment offers toothbrushes, toothpaste, and other oral care products; and gastrointestinal, rapid diagnostics, respiratory, vitamins/minerals/supplements, pain relief, and other personal health care products under the Crest, Oral-B, Metamucil, Neurobion, Pepto Bismol, and Vicks brands. The Fabric & Home Care segment provides fabric enhancers, laundry additives, and laundry detergents; and air care, dish care, P&G professional, and surface care products under the Ariel, Downy, Gain, Tide, Cascade, Dawn, Fairy, Febreze, Mr. Clean, and Swiffer brands.

The Baby, Feminine & Family Care segment baby wipes, taped diapers, and pants; adult incontinence and feminine care products; and paper towels, tissues, and toilet papers under the Luvs, Pampers Always, Always Discreet, Tampax Bounty, Charmin, and Puffs brands.

The company sells its products through mass merchandisers, e-commerce, grocery stores, membership club stores, drug stores, department stores, distributors, wholesalers, baby stores, specialty beauty stores, high-frequency stores, and pharmacies.

The Procter & Gamble Company was founded in 1837 and is headquartered in Cincinnati, Ohio.

Expertise: financial technology, analyzing market trends. Brian is a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to research stock fundamentals. Brian’s background is in physics & computer science and previously worked as a software engineer at GE Healthcare. He enjoys applying his expertise in technology to help find market trends that impact investors. Brian can be reached at brian@finbox.io or at +1 (516) 778-6257.

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