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How PG’s Valuation Compares to Peers

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Nov. 20 2020, Updated 4:21 p.m. ET

Valuation summary

As of April 18, Procter & Gamble (PG) was trading at a 12-month forward PE (price-to-earnings) ratio of 22.8x. Currently, the company is trading at a higher valuation multiple than the S&P 500 (SPX) Index’s forward PE of 18.3x as well as the S&P 500 Consumer Staples Index’s forward PE of 21.5x.

In comparison, Procter & Gamble’s forward PE multiple is lower than most of its peers excluding Kimberly-Clark (KMB), which was trading at a forward PE ratio of 21.2x. As of April 18, Colgate-Palmolive (CL), Clorox (CLX), and Church & Dwight (CHD) were trading at forward PE multiples of 25.5x, 24.4x, and 26.7x, respectively.

The 12-month forward PE differs among companies based on several factors like growth expectations, leverage, profitability, and risk-return profiles.

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What analysts expect for fiscal 2017

Given the uncertainties around the consumer product industry, analysts expect Procter & Gamble’s top line to remain muted in fiscal 2017. They project the company will post revenue of $65.2 billion in fiscal 2017, which remains in line with the prior year and with the management’s guidance.

Although management expects to generate organic sales growth of 2% to 3% in fiscal 2017, adverse currency fluctuations and minor brand divestitures could offset the growth.

As for EPS, analysts expect the company’s fiscal 2017 adjusted EPS (earnings per share) to rise 4.6% to $3.84. Meanwhile, management expects its adjusted EPS to increase in the mid-single digits for fiscal 2017 as compared to its adjusted EPS of $3.67 in fiscal 2016.

For more updates, visit Market Realist’s Consumer Products page.

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