PROCTER & GAMBLE NYSE-PG
TIMELINESS
SAFETY
TECHNICAL
4
1
5
High:
Low:
Lowered 9/4/15
57.4
48.9
59.7
51.2
RECENT
PRICE
64.7
52.8
75.2
60.4
20.1 RELATIVE
DIV’D
Median: 18.0) P/E RATIO 1.21 YLD 3.3%
79.68 P/ERATIO 21.0(Trailing:
73.8
54.9
63.5
43.9
65.4
39.4
67.7
57.6
71.0
59.1
85.8
68.4
93.9
75.3
91.8
65.0
Target Price Range
2018 2019 2020
LEGENDS
13.0 x ″Cash Flow″ p sh
. . . . Relative Price Strength
2-for-1 split 6/04
Options: Yes
Shaded area indicates recession
Raised 1/11/02
Lowered 12/25/15
BETA .65 (1.00 = Market)
2018-20 PROJECTIONS
VALUE
LINE
160
120
100
80
60
50
40
30
Ann’l Total
Price
Gain
Return
High 105 (+30%) 10%
Low
85
(+5%)
5%
Insider Decisions
to Buy
Options
to Sell
J F
0 0
3 5
4 10
M
0
0
0
A
0
1
1
M
0
1
4
J
0
0
0
J A
0 0
0 6
0 12
S
0
0
1
% TOT. RETURN 11/15
Institutional Decisions
1Q2015
2Q2015
3Q2015
861
838
897
to Buy
to Sell
867
856
805
Hld’s(000)163552116264921638195
Percent
shares
traded
12
8
4
1 yr.
3 yr.
5 yr.
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
14.44 15.30 15.14 15.47 16.72 20.21 22.95 21.46 24.42 27.53 27.09 27.81 29.85 30.45
2.34
2.41
2.53
2.55
2.82
3.18
3.51
3.51
4.25
4.97
4.86
4.87
5.21
5.20
1.43
1.48
1.56
1.80
2.04
2.32
2.53
2.64
3.04
3.64
3.58
3.53
3.93
3.85
.57
.64
.70
.76
.82
.93
1.03
1.15
1.28
1.45
1.64
1.80
1.97
2.14
1.07
1.16
.96
.65
.57
.80
.88
.84
.94
1.00
1.11
1.08
1.20
1.44
3.89
4.04
3.98
4.64
5.63
6.19
6.47 19.33 20.87 22.46 21.18 21.20 24.14 22.87
2639.6 2611.7 2591.5 2601.5 2594.4 2543.8 2472.9 3178.8 3131.9 3032.7 2917.0 2838.5 2765.7 2748.0
30.8
29.7
21.4
22.4
21.6
21.3
21.5
21.5
20.5
18.6
16.4
17.0
16.0
16.7
1.76
1.93
1.10
1.22
1.23
1.13
1.14
1.16
1.09
1.12
1.09
1.08
1.00
1.06
1.3%
1.5%
2.1%
1.9%
1.9%
1.9%
1.9%
2.0%
2.1%
2.1%
2.8%
3.0%
3.1%
3.3%
CAPITAL STRUCTURE as of 9/30/15
Total Debt $30.487 bill. Due in 5 Yrs $19.750 bill.
LT Debt $17.394 bill. LT Interest $4.65 bill.
(Tot. Int. Coverage: 24.3x)
(22% of Tot. Cap’l)
Leases, Uncapitalized Annual Rentals $259 mill.
Pension Assets-6/14 $10.6 bill.
Oblig. $16.0 bill.
Pfd Stock $1.1 bill.
Pfd Div’d $259 mill.
(ESOP owns 49,3 mill Class A shares and 57.2 mill
Class B shares; convertible into common stock.)
Common Stock 2,720,572,743 shares
MARKET CAP: $217 billion (Large Cap)
CURRENT POSITION 2014
2015 9/30/15
($MILL.)
Cash Assets
10686 11612 12606
Receivables
6386
4861
4724
Inventory (FIFO)
6759
5454
5239
Other
7786
7719 13051
Current Assets
31617 29646 35620
Accts Payable
8461
8257
7758
Debt Due
15606 12021 13093
Other
9659
9512 10716
Current Liab.
33726 29790 31567
ANNUAL RATES Past
of change (per sh)
10 Yrs.
Sales
4.0%
‘‘Cash Flow’’
5.5%
Earnings
6.0%
Dividends
10.0%
Book Value
15.0%
Fiscal
Year
Ends
2012
2013
2014
2015
2016
Fiscal
Year
Ends
2012
2013
2014
2015
2016
Calendar
2011
2012
2013
2014
2015
Past Est’d ’13-’15
5 Yrs.
to ’18-’20
1.5%
1.5%
2.0%
6.0%
2.5%
7.5%
8.5%
4.0%
2.5%
5.0%
QUARTERLY SALES ($ mill.) A
Sep.30 Dec.31 Mar.31 Jun.30
21530 21744 20194 20212
20739 22175 20598 20655
20830 21897 20178 20157
20186 20161 18142 17790
16527 16975 16375 16373
EARNINGS PER SHARE AB
Sep.30 Dec.31 Mar.31 Jun.30
1.01
1.09
.94
.82
1.06
1.22
.99
.79
1.05
1.20
1.02
.95
1.04
1.06
.92
1.00
.98
.97
.90
.95
QUARTERLY DIVIDENDS PAID C■
Mar.31 Jun.30 Sep.30 Dec.31
.482
.525
.525
.525
.525
.562
.562
.562
.562
.602
.602
.602
.602
.644
.644
.644
.644
.663
.663
.663
Full
Fiscal
Year
83680
84167
83062
76279
66250
Full
Fiscal
Year
(A) Fiscal years end June 30th. (B) Diluted
earnings. Excludes nonrecurring: ’99, (13¢);
’00, (24¢); ’01, (53¢); ’02, (25¢); ’03, (19¢); ’08,
(12¢); ’09, (64¢); ’10, 58¢; ’11, (61¢); ’12,
3.85
4.05
4.22
4.02
3.80
Full
Year
2.06
2.21
2.37
2.53
THIS
STOCK
VL ARITH.*
INDEX
-14.5
16.9
42.6
-2.0
48.1
71.2
© VALUE LINE PUB. LLC
30.69 30.64 28.10 24.55 Sales per sh A
5.33
5.57
5.31
5.00 ‘‘Cash Flow’’ per sh
4.05
4.22
4.02
3.80 Earnings per sh AB
2.29
2.45
2.59
2.75 Div’ds Decl’d per sh C■
1.46
1.42
1.38
1.45 Cap’l Spending per sh
24.64 25.40 22.83 23.85 Book Value per sh D
2742.3 2710.8 2714.5 2700.0 Common Shs Outst’g E
17.8
19.0
20.9
Avg Ann’l P/E Ratio
1.00
1.00
1.05
Relative P/E Ratio
3.2%
3.1%
3.1%
Avg Ann’l Div’d Yield
Sales ($mill) A
Operating Margin
Depreciation ($mill)
Net Profit ($mill)
Income Tax Rate
Net Profit Margin
Working Cap’l ($mill)
Long-Term Debt ($mill)
Shr. Equity ($mill)
Return on Total Cap’l
Return on Shr. Equity
Retained to Com Eq
All Div’ds to Net Prof
20
15
18-20
32.30
7.15
5.85
3.00
1.50
30.85
2650.0
16.0
1.00
3.2%
56741 68222 76476 83503 79029 78938 82559 83680
21.7% 23.3% 24.3% 24.2% 24.3% 24.2% 22.6% 22.6%
1884.0 2627.0 3130.0 3166.0 3082.0 3108.0 2838.0 3204.0
6923.0 8684.0 10340 12075 11293 10946 11797 11344
30.5% 30.0% 29.7% 24.9% 26.3% 27.3% 22.3% 24.2%
12.2% 12.7% 13.5% 14.5% 14.3% 13.9% 14.3% 13.6%
d4710 4344.0 d6686 d6443 d8996 d5500 d5323 d2997
12887 35976 23375 23581 20652 21360 22033 21080
17477 62908 66760 69494 63099 61439 68001 64035
23.7%
9.3% 12.1% 13.8% 14.3% 13.8% 13.5% 13.8%
39.6% 13.8% 15.5% 17.4% 17.9% 17.8% 17.3% 17.7%
26.2%
8.1%
9.4% 10.9% 10.1%
9.1%
9.0%
8.3%
39%
43%
41%
39%
45%
50%
49%
54%
84167 83062 76279
22.3% 23.7% 23.4%
2982.0 3141.0 3134.0
11869 12220 11535
23.2% 23.5% 20.2%
14.1% 14.7% 15.1%
d6047 d2109 d144.0
19111 19811 18329
68709 69976 63050
13.9% 14.0% 14.6%
17.3% 17.5% 18.3%
7.9%
7.7%
6.9%
55%
57%
63%
BUSINESS: The Procter & Gamble Company makes branded consumer packaged goods, which are marketed and sold in more than
180 countries around the world. Has five reportable segments:
Beauty/Hair/Personal care (24% of fiscal 2015 sales); Grooming
(10%); Health Care (10%); Fabric Care & Home Care (29%); Baby,
Feminine & Family Care (27%). International operations accounted
for 65% of fiscal 2014 top line, 45% of earnings. Wal-Mart Stores
accounted for 14% of fiscal 2015 sales. Employs about 110,000.
Officer & directors own less than 1% of common stock (8/15 proxy).
Chairman, President & CEO: A. G. Lafley. Incorporated: Ohio. Address: One Procter & Gamble Plaza, Cincinnati, Ohio 45202. Telephone: 513-983-1100. Internet: www.pg.com.
Procter & Gamble got off to a soft
start in fiscal 2016. (Year began October
1st.) In all, core earnings slipped 6%, on a
12% revenue decline during the September
quarter. The company continued to struggle owing to an unfavorable foreign exchange environment (due to the strength
of the U.S. dollar). Plus, recent asset disposals and minor brand divestitures did
not help its first-quarter performance.
The company will probably post lackluster results this year. The weak outlook for global exchange rates is liable to
pressure near-term totals. In fact, we
think this will erase much of the gains
from the company’s pricing initiatives,
stronger sales volume, and P&G’s strategic growth efforts. Some of its toughest
markets contribute roughly 20% to the top
line. Further, its most recent exit from the
beauty business, combined with the aforementioned portfolio downsizing, will also
hurt revenue comparisons. Consequently,
we look for the top line to fall between
10% and 15% this year. Ongoing stock
buybacks may help share earnings fare
somewhat better, but we still look for the
bottom line to recede about 5% in 2016.
Management’s efforts ought to bolster
results over the long haul. Indeed, it
has been focusing on increasing productivity through supply-chain improvements. And we anticipate manufacturing
efficiencies, lower operating costs, and better distribution channels will also help
widen margins. Plus, the company’s business transformation, spearheaded by its
recent streamlining efforts, should enable
it to focus on fewer product categories. To
this end, we imagine P&G will continue to
strategically invest in its product pipeline
and its more profitable brands. Likewise,
the company may ramp up its marketing
campaign to help it fight for shelf space.
These shares appear to be well valued
at this juncture. The stock has
rebounded nearly 12% in price since our
September review. The recent uptick has
eroded some of its long-term capital appreciation potential. Moreover, PG is ranked
to underperform the broader market averages in the coming year. On the other
hand, the blue chip holds attractive riskadjusted total return possibilities over the
2018-2020 time frame.
Orly Seidman
December 25, 2015
(73¢); ’13, d19¢; ’14, d21¢. EPS may not sum. intangibles. In ’15: $74.1 bill., $27.30 a share.
(E) In millions, adjusted for splits.
Next earnings report due late January.
(C) Dividends historically paid in Feb., May,
Aug., and Nov. ■ DRIP available. (D) Includes
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66250
24.5%
3200
10260
24.0%
15.5%
d220
17000
64425
12.5%
16.0%
4.5%
72%
Company’s Financial Strength
Stock’s Price Stability
Price Growth Persistence
Earnings Predictability
85550
25.5%
3500
15525
25.0%
18.1%
d100
17000
81800
15.5%
19.0%
8.5%
55%
A++
100
35
100
To subscribe call 1-800-VALUELINE