One Reason Procter & Gamble (PG) Stock Is Down Today

NEW YORK (TheStreet) -- Shares of Procter & Gamble Co. (PG) are down 0.20% to $87.93 in early morning trading on Monday after the company was downgraded to "hold" from "buy" at Canaccord Genuity.

The firm reiterated its $89 price target for the American multinational consumer goods company.

Canaccord said it lowered Procter & Gamble's rating based on a valuation call.

"We feel the share price now captures most of the potential upside in the base business over the medium term," said Canaccord analyst Alicia Forry.  "Our forecasts already assume 5% organic sales growth in F16 (and 2.5% in F15)."

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, expanding profit margins, increase in stock price during the past year, largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. 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 significantly increased by 77.73% to $3,633.00 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 61.68%.
  • The gross profit margin for PROCTER & GAMBLE CO is rather high; currently it is at 53.60%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 9.57% trails the industry average.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • PROCTER & GAMBLE CO's earnings per share declined by 34.0% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, PROCTER & GAMBLE CO increased its bottom line by earning $3.98 versus $3.87 in the prior year. This year, the market expects an improvement in earnings ($4.38 versus $3.98).
  • The current debt-to-equity ratio, 0.50, 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.
  • You can view the full analysis from the report here: PG Ratings Report
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