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Can Procter & Gamble’s Stock Price Gain Momentum?

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Fall in prices of P&G and S&P 500 Index

Procter & Gamble (PG), or P&G, is set to announce its 1Q16 earnings before the market opens on October 23, 2015. Procter & Gamble was trading at $74.11 on October 13, 2015. The stock price fell by 18.1% YTD (year-to-date). The benchmark S&P 500 Index  (IVV) (SPY) (VOO) also fell by 2.6% YTD.

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Price movement

Procter & Gamble’s stock has consistently fallen since the beginning of 2015. However, the stock was able to sustain some of the gains until September. It fell by ~17.2% to $68.06 on September 14, 2015, from $82.24 on July 17, 2015. The fall was primarily due to currency headwinds and the fall in global markets, particularly in the Asia-Pacific region. Although P&G has recovered since then, it’s still far from its 2015 peak of $91.62. It reached the peak on January 22.

The stock prices for peers Kimberly-Clark (KMB) and Colgate-Palmolive (CL) fell by 0.4% and 4.4%, respectively, YTD.

Dividend payment

P&G also declared a quarterly dividend of $0.66 per share on October 13. It will be payable to its shareholders on or after November 16, 2015. For fiscal 2015, P&G increased the dividend for the 59th consecutive year. It returned $11.9 billion in cash to shareholders in fiscal 2015 as well as $7.3 billion in dividends and $4.6 billion in share repurchases. Over the past five years, P&G has returned ~$60 billion to shareholders, averaging ~$12 billion a year.

P&G’s dividend yield for the trailing-12-months is the highest at 3.5%. Clorox (CLX), Colgate-Palmolive, and Kimberly-Clark have dividend yields of ~2.5%, ~2.8%, and ~3%, respectively.

Venezuela’s impact

During P&G’s 4Q15 earnings release, the company announced that it will stop consolidating the results of its local Venezuelan operation in its GAAP financial statements. This was due to P&G’s inability to convert currency or pay dividends. Recently, Clorox also discontinued its Clorox Venezuela operations effective September 22, 2014.

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