NEW YORK (TheStreet) -- Shares of Procter & Gamble Co. (PG) are up $1.01% to $82.61 after it was reported that the company is working with advisers including Goldman Sachs Group (GS) as it reviews up to 100 underperforming brands for potential divestiture, sources told Reuters.
While P&G has yet to determine which brands it will seek to shed, Duracell batteries and Braun shavers are the two largest assets likely to be divested, sources said.
Duracell, the battery business, has an EBITDA of about $500 million, sources said. Braun, the next largest brand likely to be shed, has less than $100 million in EBITDA, sources told Reuters.
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 growth in earnings per share, increase in net income, expanding profit margins, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- PROCTER & GAMBLE CO has improved earnings per share by 39.1% in the most recent quarter compared to the same quarter a year ago. 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 $3.99 versus $3.87 in the prior year. This year, the market expects an improvement in earnings ($4.45 versus $3.99).
- The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Household Products industry average. The net income increased by 37.5% when compared to the same quarter one year prior, rising from $1,875.00 million to $2,579.00 million.
- The gross profit margin for PROCTER & GAMBLE CO is rather high; currently it is at 51.99%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 12.79% is above that of the industry average.
- Net operating cash flow has slightly increased to $4,506.00 million or 2.59% 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 -1.00%.
- The current debt-to-equity ratio, 0.51, 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 0.51, displays a potential problem in covering short-term cash needs.
- You can view the full analysis from the report here: PG Ratings Report