The Procter & Gamble Company (PG), based in Cincinnati, Ohio, is a top consumer product manufacturer. Renowned for its wide array of household brands, such as Tide, Pampers, Gillette, and Crest, PG boasts a market cap of $396.6 billion. The company is also recognized for its innovation and leadership in the beauty, grooming, health care, and home care sectors.
Shares of this consumer goods behemoth have underperformed the broader market over the last year. The stock has gained 8.3% over this time frame, while the broader S&P 500 Index ($SPX) has rallied 17%. But things are looking up for the stock in 2024, as PG stock is up 14.7% this year, surpassing SPX’s 9.9% rise on a YTD basis.
Narrowing the focus, PG has outperformed the Consumer Staples Select Sector SPDR Fund (XLP), which has surged 4.8% over the past 52 weeks. PG’s double-digit gains comfortably outpaced the ETF’s 8.6% returns on a YTD basis.
Procter & Gamble's underperformance relative to the broader market can be attributed to recent price increases. While these hikes have driven sales growth, they have also led to stagnant or declining volumes as consumers purchase fewer items. Additionally, weak market conditions and sluggish demand in China, P&G's second-largest market, have further pressured the stock.
On Jul. 30, shares of Procter & Gamble closed down 4.8% after the company announced its Q4 earnings report. Despite exceeding bottom-line expectations, the company's weaker-than-expected quarterly revenue, driven by disappointing demand in China, negatively impacted its results.
For the current fiscal year, ending in June 2025, analysts expect PG’s EPS to rise 5.8% to $6.97 on a diluted basis. The company's earnings surprise history is robust. It beat the consensus estimate in each of the last four quarters.
Among the 24 analysts covering PG stock, the overall consensus rating is a “Moderate Buy.” That’s based on 14 “Strong Buy” ratings, two “Moderate Buys,’” and eight “Holds.”
This configuration is slightly less bullish than two months ago, with 13 analysts suggesting a “Strong Buy.”
On Jul. 31, RBC Capital raised Procter & Gamble's price target to $164 from $157 and maintained a “Sector Perform” rating after its Q4 earnings release. The analyst notes the company is navigating the challenging environment well, but the stock's valuation is "full at current levels" despite competitors showing improvement.
The mean price target of $175.71 represents a 4.5% premium to PG’s current price levels. The Street-high price target of $191 suggests an upside potential of 13.6%.
On the date of publication, Kritika Sarmah did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
