Proctor and
Gamble is a major household products and cosmetics company marketing products
in over 180 countries with three divisions:
(1) Beauty and
Health products: Cover Girl, Max Factor, Olay, Old Spice, Clairol Nice ‘n Easy,
Pantene, Head and Shoulders, Wella, Pert, Ivory, Safeguard, Zest, Secret, Right
Guard, Always, Whisper, Tampax, Actonel, Prilosec OTC, Vicks, Scope,
Pepto-Bismol, Therm-Care, Metamucil, NyQuil and Oral B,
(2) Household
Care: Tide, Gain, Dash, Ariel, Downy, Frebreeze, Dial, Joy, Cascade, Swiffer,
Mr. Clean, Crest, Iams, Eukanuba, and Pringles,
(3) Grooming:
Gillette, Mach 3, Venus, Braun, Duracell,
(4)
Family and Baby Care: Pampers, Luvs, Charmin, Bounty, Puffs.
The company has
grown earnings and dividends 9-11% for the last 10 years on a 15-17% return on
equity. Management’s expects to continue
this record because of:
(1) its
aggressive expansion of its portfolio of brands through both acquisitions and
new product development,
(2) its powerful
marketing effort,
(3) expand
rapidly into faster growing developing countries,
(4) emphasize a
faster growing, higher margin product mix [e.g. health and beauty care
products] and divest lower margin/non core operations,
(5) generates
strong cash flow to not only finance the strategy described above but to also
conduct a huge stock buy back program as well as raise its dividend every year.
Negatives:
(1) subject to
commodity cost inflation and currency fluctuations,
(2) it is in an
intensely competitive industry,
(3) sluggish
growth in developed markets.
PG is rated A++ by Value
Line, has a 21% debt to equity ratio and its stock yields 3.0%.
Statistical Summary
Stock Dividend Payout # Increases
Yield Growth Rate Ratio
Since 2004
PG 3.0% 8% 54% 10
Ind Ave 2.3 10 44 NA
Debt/ EPS Down Net Value Line
Equity ROE
Since 2004 Margin Rating
PG 21% 17% 3 15% A++
Ind Ave 48 16 NA 8 NA
Chart
Note:
PG stock made good progress off its March 2009 low, surpassing the downtrend
off its September 2008 high (straight red line) and the November 2008 trading
high (green line). Long term the stock
is in an uptrend (blue lines).
Intermediate term, it is in a trading range (purple lines). The wiggly red line is the 50 day moving
average. The Dividend Growth Portfolio
owns a 75% position in PG. It is
currently on the Dividend Growth Buy List; the lower boundary of its Sell Half
Range is $109.
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