Procter & Gamble: A Safe Harbour from Potential Storms Ahead

Company Update (PG US) (Buy): Growth has been weaker recently, but for temporary reasons, and P&G remains well-placed against macro headwinds.

Highlights

• Shares are at ~24x FY25 EPS and have a 2.5% Dividend Yield.

• Growth was lower in recent quarters, but headwinds will be lapped after H1 FY25.

• US focus and product categories mean P&G is well-placed against macro risks.

• Pricing power and earnings resilience demonstrated in FY22-23.

• With shares at $169.54, we expect a 28% total return (10.1% IRR) by Jun-27.

Introduction

We review our Buy rating on Procter & Gamble (“P&G”) ahead of the investor day scheduled this Thursday (November 21).

We initiated our coverage of P&G with a Buy rating in January, and also included P&G as part of our “Select 15” model portfolio between March and June. P&G shares have gained 15.7% (including dividends) since our initiation.

P&G Share Price (Last 1 Year)

Source: Google Finance (17-Nov-24).

We believe P&G shares offer a solid if unspectacular 10%+ annualized return over the next few years, all the more valuable given the business’s ability to cope with potential macro headwinds ahead. Growth rates have been weaker in recent quarters, largely due to negatives in China and the Middle East that should be lapped after H1 FY25.

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