Welcome to the Stock of the Day.
The Sochi Winter Olympics are just weeks away and as one of the event’s biggest sponsors, Procter & Gamble (PG) will be front and center on the airwaves.
With the big games, earnings season and a quarterly dividend around the corner, let’s revisit PG and see if it’s a good buy at current prices.
With $84.6 billion in annual sales and 121,000 employees, Procter & Gamble is one of the world’s largest multinational consumer goods companies. Every day, millions of homes use Procter & Gamble brands, whether it’s Pantene, Oral-B, Old Spice, NyQuil, Dawn or Bounty. All told, Procter & Gamble’s $25 billion brand portfolio covers 4.6 billion consumers in 180 countries.
Procter & Gamble is scheduled to report fiscal second-quarter results before the opening bell on January 24. Judging from the latest analyst estimates, this earnings announcement isn’t going to turn any heads. Right now, Procter & Gamble is headed towards 0.9% annual sales growth and a 0.8% drop in earnings. The picture does brighten as you look further ahead, however. Looking ahead to the fiscal third quarter, analysts forecast 2.6% sales growth and 10.1% earnings growth.
PG shares go ex-dividend on January 22. Shareholders of record will receive 60.15 cents per share on February 18. At current prices, the stock has a 2.97% annual dividend yield–ranking seventh highest in the Personal Products industry (out of 124 companies. Procter & Gamble boasts a strong dividend track record–over the past six years it has more than doubled its quarterly dividend payment. Procter & Gamble has paid dividends for 122 years and this is the 58th consecutive year that the company has increased the dividend.
Before you buy any stock, you should always run it through my free Portfolio Grader ratings system. While this Conservative stock spent much of 2013 in buy territory, 2014 has proven to be a less exciting year for the household products company.
Right now, PG receives a C for both its Fundamental Grade and its Quantitative Grade. The Quantitative Grade indicates the stock’s risk-to-return ratio.
Breaking down the company’s financials, Procter & Gamble scores well on operating margin growth (B) and return on equity (B), but has mediocre sales growth (C) and earnings growth (C). And P&G could really stand to work on earnings momentum (D) and earnings surprises (D).
Bottom Line: As of this posting I consider PG a C-rated Hold.