In fact, the total annual return of this stock and the overall market are almost exactly the same 13%+ over the past five years.
Even during the past six months, as this graph from Barchart shows, the stock and the market as measured by the Value Line Index have tracked each other pretty closely. The market was down about 3% for the period while the stock was down about 1%:
Procter & Gamble, together with its subsidiaries, engages in the manufacture and sale of a range of branded consumer packaged goods. The company operates in five segments: Beauty, Grooming, Health Care, Fabric Care and Home Care, and Baby Care and Family Care.
The company markets its products through mass merchandisers, grocery stores, membership club stores, drug stores, high-frequency stores, department stores, perfumeries, pharmacies, salons, and e-commerce in approximately 180 countries worldwide. The Procter & Gamble Company was founded in 1837 and is based in Cincinnati. (Yahoo Finance profile)
Factors to consider:
Technical factors provided by Barchart:
The stock scores a 64% Barchart technical buy signal and also a Trend Spotter buy signal. It trades above its 20-, 50- and 100-day moving averages. The price hit 12 new highs and was up 3.60% in the last month and is up 5.86% for the one-year period.
The price is only 1.82% off its high during the past year. The Relative Strength Index is above 50% at 63.30% and Barchart computes a technical support level at 66.39. It recently traded at $66.71, which is above its 50-day moving average of $63.84.
Wall Street brokerage firms have long recommended PG for long-term conservative investors, and 15 brokerage houses have assigned 25 analysts to run the numbers. Analysts project revenue will grow by 0.50% this year and another 3% next year. Earnings are estimated to increase by 0.30% this year, an additional 8.2% next year and continue to increase by an annual rate of 8.28% over the next five years.
The P/E ratio of 17.16 is slightly higher than the market P/E of 14.60. The dividend rate is 3.37%, which is about 50% of projected earnings and higher than the market's dividend rate of 2.3% The dividend has been raised steadily and is expected to grow between 8% and 10% over the next five years. The balance sheet gets an A++ financial strength rating.
Although the sales and earnings growth projections are not aggressive, the stock has a long history of ever-increasing revenue and earnings. Management has promised to add stockholder value through a $4 billion share buyback program. About 1/3 of the sales are in emerging markets countries, so big growth cannot come without a worldwide economic recovery.
The staff of
rates the stock a B. Wall Street brokerage analysts have released six strong buy, six buy, 12 hold and one underperform recommendation to there clients. They expect total annual return to investors will be in the 13% to 17% range over the next five years.
Individual investor interest from the readers of
is high where 7,697 readers gave a 97% vote that the stock will beat the market. Short interest grew from about 14 million shares in March to a high of 20 million shares in mid-June but has retreated to about 18 million shares recently.
Comparison to its peers:
While Procter & Gamble was up 6% in the past year,
was up 20%,
was up 24% and
was up 9%.
Colgate-Palmolive was rated A+ by
staff. Analysts project revenue will grow 2.7% this year and another 4.4% next year. Earnings are estimated to be up 6.4% this year and 9.5% next year.
Kimberly-Clark was rated A+ by
staff. Revenue is projected to be up 1% this year and 2.7% next year. Earnings increases are estimated to be 7.9% this year and 7.3% next year.
Clorox is rated a B- by TheStreet staff. Revenue is projected to be up 3.4% this year and 3.3% next year. Earnings could be up 4.6% this year and 7.9% next year.
Procter & Gamble has been around for 175 years and analysts think it will continue to increase revenue and earnings in the long run. I define a growth stock as one projected to have revenue and earnings increases above 10%, so I can't call this a growth stock.
Since the stock has an above-average dividend rate and a total return projection in the 13% to 17% range, the stock is better suited for tax-deferred account on a dividend reinvestment program instead of a taxable account where your return will be decreased by the taxable dividend. Momentum investors might also consider this stock as it is beginning to trade above its moving averages and turtle channels:
This article was written by an independent contributor, separate from TheStreet's regular news coverage.