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P&G Holds Appeal for
Conservative-Minded Investors

The Procter & Gamble (NYSE: PG) was recently highlighted in Value Line’s Market Focus, newsletter. The Cincinnati-headquartered corporation manufactures a huge variety of consumer packaged goods, which are marketed and sold in more than 180 countries. It employs 99,000 individuals, has a market capitalization in excess of $330 billion, and has been a component of the Dow Jones Industrial Average since 1932.

The consumer products giant registered a good performance in its fiscal third quarter (ended March 31st). Sales advanced 5%, year over year, to $18.1 billion, thanks to elevated demand for many of its offerings and recent price hikes, and earnings increased 8% to $1.26 a share, reflecting a more favorable sales mix. Results also received a boost from the easing of COVID-19 market pressures and favorable foreign exchange rates. Looking ahead, these tailwinds should remain intact, which will probably offset higher raw materials costs as well as an increase in other expenses, such as distribution costs.

Restructuring, productivity enhancements, and cost-reduction efforts will likely bolster profits long term. Additionally, the Dow component continues to invest in its product pipeline, which, along with innovation and brand building, ought to help it increase market share over time. Lastly, a strong distribution network and a growing e-commerce channel will probably expand its already considerable reach.

As for the equity, it holds some appeal. The company’s stellar balance sheet (P&G gets our premier rating for Financial Strength: A++) ought to appeal to conservative-minded investors. It holds our top marks for Earnings Predictability and Price Growth Persistence, and the dividend yield (recently 2.6%) is above the Value Line median. While investors will have to pay a premium after PG’s recent rise, it is still a good place to put some funds amid elevated equity valuations.

Editor’s Note: Value Line’s Market Focus newsletter provides unbiased insights on investments, the markets and the global economy. Value Line offers a broad array of investment research services. For details visit www.valueline.com.

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