Q: Can I ‘clean up’ on P&G stock?
A: Procter & Gamble (PG) is known for being stable. But in a world that values growth, stability means investors haven’t been mopping up profits.
The diversified consumers products company’s shares have been unchanged over the past 12 months. Longer-term P&G stock has done better, rising 20% over the past five years. But, the Standard & Poor’s 500 has risen 53% during the same time. P&G’s 3.3% dividend yield tops the S&P 500’s roughly 2% yield, but not by enough to make up the difference. The trouble with P&G, in investors’ eyes, is the fact it isn’t growing. Revenue the past 12 months was $71.3 billion, which is 12% below where it was in fiscal 2011. Net income is down by about 23% during the same period. Reinvigorating growth will be difficult for the company as it faces headwinds. Fiscal 2016 revenue will likely decline 7.5% as the company is dealing with an estimated 6.5% hit from foreign currency translations and a 2.5% hit from asset sales, according to a report by Joe Agnese at S&P Global Market Intelligence. More innovation and marketing is needed, Agnese says. But don’t expect P&G to “clean up” as you put it. Analysts think the stock will be worth $84.91 in 18 months, just 6% higher than Wednesday’s price of about $80 a share.
USA TODAY markets reporter Matt Krantz answers a different reader question every weekday. To submit a question, e-mail Matt at mkrantz@usatoday.com or on Twitter @mattkrantz.
