Analysts maintain a neutral outlook
Procter & Gamble’s (PG) better-than-expected sales and earnings in the first half of fiscal 2019 have driven its stock higher so far this year. However, heightened competition, cost headwinds, and high valuation are keeping analysts on the sidelines.
Procter & Gamble is facing tough competition in the Grooming and Baby Care segments. Meanwhile, increased pricing is hurting its volumes, and continued inflation in input and transportation costs are expected to hurt its margins.
Procter & Gamble stock is trading at 22.7x its fiscal 2019 estimated EPS of $4.45 and 21.3x its fiscal 2020 estimated EPS of $4.76—both of which look unattractive given the pressure on its margins and its projected EPS growth rates of 5% and 7%, respectively, in those periods.
Ratings and target price
Of the 25 analysts covering Procter & Gamble stock, 16 have given it “hold” recommendations, and nine have given it “buy” recommendations. Analysts have a consensus target price of $98.07 per share on PG stock, which implies a potential downside of ~3% based on its closing price of $101.18 on March 13.
Wall Street also maintains neutral outlooks on other consumer packaged goods stocks. The majority of analysts recommend “holds” on Colgate-Palmolive (CL), the Clorox Company (CLX), Church & Dwight (CHD), and Kimberly-Clark (KMB).