Investors: Is Procter & Gamble’s Bulletproof Equity Era Over?
With shares of Procter & Gamble (NYSE:PG) trading at around $69.22, is PG a Buy, a Wait and See, or a Stay Away? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:
C = Catalyst for the Stock’s Movement
P&G has been one of the best stocks to own over the past several decades. If you have owned it since the early 1970s, then you have enjoyed great stock performance, solid dividends, and six splits. Despite the stock being near a 52-week high at the moment, the stock’s performance over the past two years has been up and down. However, that’s the great part about owning a high-yield stock. You still make money. Perhaps we shouldn’t say ‘high-yield’ since 3.20% isn’t extraordinary. The highest it has ever gone was 3.80%.
As well all know, you can look in any closet or cabinet in your home and find a Procter & Gamble product. P&G is a top-tier consumer staples stock. This, in turn, has led to one of the steadiest stock rises in history. Amazingly, P&G remains appealing despite very limited changes. It’s far from a growth stock, yet it performs better than most growth stocks. Will that trend continue?
The biggest negative for P&G has always been weak growth potential. However, that shouldn’t scare you. Procter & Gamble is currently increasing profitability in emerging markets while also heading in the direction of cost-savings. Most importantly cash flow is always strong.
E = Debt to Equity Ratio is Normal
Procter & Gamble has a debt-to-equity ratio of .49, which is extremely low. It’s in range with Procter & Gamble’s competitors. Kimberly-Clark (NYSE:KMB) has a debt-to-equity ratio of 1.10. Johnson & Johnson (NYSE:JNJ), has a debt-to-equity ratio of .26.
Procter & Gamble has $5.30 billion in cash and $31.88 billion in debt. These numbers might seem a little scary, but assets greatly outweigh liabilities. Kimberly-Clark has $1.25 billion in cash and $6.40 billion in debt. Johnson & Johnson has $19.77 billion in cash and $11.43 billion in debt. Johnson & Johnson is clearly the leader of the pack in this category, and rightfully so. JNJ is one of the safest stocks to own on the planet, even more so than P&G…