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Understanding the Volatile Stock Movements of CPG Companies in 4Q15

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P&G and Colgate’s stock price movement

From January 2, 2015, to March 18, 2016, the stock prices of all major CPG (consumer packaged goods) companies have seen volatile movements. Procter & Gamble’s or P&G’s (PG) stock price, for example, rose by 2.6% to $78.81 on January 26, 2016, after results were released. The stock was down by 8.5% compared with January 2, 2015.

Similarly, Colgate-Palmolive’s stock rose by 3.9% to $67.53, on January 29, 2016, after results were released, but the stock has been down by 1.2% since January 2, 2015. Both P&G and Colgate stocks have seen volatility since the start of 2015. Still, these companies stock prices have been able to sustain some of the gains from September and October 2015 after the global market crash, particularly in Asia-Pacific.

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Upward movement

Clorox’s (CLX) stock price fell by 4.9% to $124.71, on February 4, 2016, after results were released. But the stock was up by 22.8% since January 2015, having consistently moved up since that time. Still, the stock fell by almost 7.3% to $109.60 on September 4, 2015, from $118.21 on August 7, 2015, primarily due to currency headwinds and the fall in global markets.

By comparison, Church & Dwight’s (CHD) and Kimberly-Clark’s (KMB) stock prices were up by 16.3% and 17.7%, respectively, over January 2, 2015, while the benchmark S&P 500 Index (SPY) (IVV) (VOO) has fallen 0.9% in the same period.

Dividend and share repurchases in 4Q15

P&G declared a quarterly dividend of $0.6629 per share on January 12, which was payable on or after February 16, 2016, to its shareholders. Clorox did not repurchase any shares in 4Q15, but in 3Q15, it did repurchase about one million shares of its common stock, at a cost of about $112 million, to offset stock option dilution. Clorox’s debt-to-EBITDA (earnings before interest, taxes, depreciation, and amortization) ratio was 1.8x—below its target range of 2x–2.5x in 3Q15.

P&G and Kimberly-Clark together made up 3.6% of the total weight of the PowerShares High Yield Equity Dividend Achievers Portfolio ETF (PEY) as of March 17, 2016.

Continue to the next part for a look at these companies’ valuation multiples.

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