NEW YORK (TheStreet) -- Shares of TheProcter & Gamble Co. (PG) - Get Procter & Gamble Company Report are slipping, down 1.25% to $84.60 in early market trading Friday, after analysts at Argus downgraded the company to "hold" from "buy" this morning.
Argus analysts said they view Procter & Gamble shares as fairly valued, due to a weaker outlook based on management's brand divestiture plan as well as its revised guidance.
Cincinnati, OH-based P&G is a consumer packaged goods company with its products sold in more than 180 countries. The company's customers include mass merchandisers, grocery stores, membership club stores, drug stores, department stores, salons, distributors, e-commerce and stores.
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Separately, TheStreet Ratings team rates PROCTER & GAMBLE CO as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
"We rate PROCTER & GAMBLE CO (PG) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its good cash flow from operations, increase in stock price during the past year, largely solid financial position with reasonable debt levels by most measures, notable return on equity and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Net operating cash flow has slightly increased to $3,435.00 million or 4.12% when compared to the same quarter last year. In addition, PROCTER & GAMBLE CO has also modestly surpassed the industry average cash flow growth rate of 0.35%.
- Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
- PROCTER & GAMBLE CO's earnings per share declined by 8.9% in the most recent quarter compared to the same quarter a year ago. Stable earnings per share over the past year indicate the company has sound management over its earnings and share float. We anticipate these figures will begin to experience more growth in the coming year. During the past fiscal year, PROCTER & GAMBLE CO increased its bottom line by earning $3.88 versus $3.87 in the prior year. This year, the market expects an improvement in earnings ($4.15 versus $3.88).
- The current debt-to-equity ratio, 0.53, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that PG's debt-to-equity ratio is low, the quick ratio, which is currently 0.53, displays a potential problem in covering short-term cash needs.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Household Products industry and the overall market on the basis of return on equity, PROCTER & GAMBLE CO has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- You can view the full analysis from the report here: PG Ratings Report