Procter & Gamble: Solid Business, Reasonably Priced, Now Reaccelerating
Initiation of Coverage (PG US) (Buy)
Shares are attractive to investors concerned with market valuations and near-term macro, with a 25.5x FY23 P/E and mid- to high-single-digit EPS growth.
Highlights
P&G has multiple strong franchises and geographic diversification
Business has done relatively well, and has right strategy and culture
EPS growth is about to reaccelerate after 2 years of high inflation
Shares are flat vs. end of 2021, P/E is 25.5x and dividend is 2.5%
At $149.94, we see 30% total return (11.6% p.a.) by Jun-26
Introduction
We initiate our coverage of Procter & Gamble (“P&G”) with a Buy rating, seeing the company as a solid business that offers a potential 10%+ annualized return with undemanding valuation assumptions.
P&G is a global leader in Consumer Staples, with strong franchises in multiple sectors and a broad geographic presence. The long-term growth algorithm is for mid- to high-single-digits Core EPS growth, which P&G expected to resume this year as inflation moderates. Historically, Core EPS has grown at a …