Why TheStreet Ratings Team Rates Procter & Gamble (PG) Stock a

NEW YORK (TheStreet) -- TheStreet Ratings team reiterates its "buy" rating on Procter & Gamble  (PG) with a ratings score of A. The stock was down 0.13% to $78.91 at 1:38 p.m. on Wednesday.

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, growth in earnings per share, increase in net income, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

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Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Net operating cash flow has slightly increased to $4,109.00 million or 6.39% 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 3.53%.
  • PROCTER & GAMBLE CO's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, PROCTER & GAMBLE CO increased its bottom line by earning $3.87 versus $3.12 in the prior year. This year, the market expects an improvement in earnings ($4.19 versus $3.87).
  • The net income growth from the same quarter one year ago has exceeded that of the Household Products industry average, but is less than that of the S&P 500. The net income increased by 1.7% when compared to the same quarter one year prior, going from $2,566.00 million to $2,609.00 million.
  • The current debt-to-equity ratio, 0.52, 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 0.50, displays a potential problem in covering short-term cash needs.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 1.5%. Since the same quarter one year prior, revenues slightly dropped by 0.2%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • You can view the full analysis from the report here: PG Ratings Report

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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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