Intrinsic value of Procter&Gamble - PG

Previous Close

$92.45

  Intrinsic Value

$81.30

stock screener

  Rating & Target

hold

-12%

Previous close

$92.45

 
Intrinsic value

$81.30

 
Up/down potential

-12%

 
Rating

hold

We calculate the intrinsic value of PG stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 230.0

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  2.60
  2.84
  3.06
  3.25
  3.43
  3.58
  3.72
  3.85
  3.97
  4.07
  4.16
  4.25
  4.32
  4.39
  4.45
  4.51
  4.56
  4.60
  4.64
  4.68
  4.71
  4.74
  4.76
  4.79
  4.81
  4.83
  4.84
  4.86
  4.87
  4.89
Revenue, $m
  68,570
  70,517
  72,672
  75,034
  77,604
  80,385
  83,379
  86,591
  90,025
  93,690
  97,590
  101,735
  106,132
  110,791
  115,722
  120,936
  126,445
  132,262
  138,398
  144,870
  151,690
  158,876
  166,445
  174,413
  182,800
  191,625
  200,909
  210,674
  220,943
  231,740
Variable operating expenses, $m
  53,648
  54,975
  56,444
  58,054
  59,806
  61,701
  63,742
  65,931
  68,273
  70,770
  66,521
  69,347
  72,344
  75,520
  78,881
  82,435
  86,190
  90,155
  94,338
  98,749
  103,398
  108,297
  113,456
  118,887
  124,604
  130,619
  136,948
  143,604
  150,604
  157,964
Fixed operating expenses, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  53,648
  54,975
  56,444
  58,054
  59,806
  61,701
  63,742
  65,931
  68,273
  70,770
  66,521
  69,347
  72,344
  75,520
  78,881
  82,435
  86,190
  90,155
  94,338
  98,749
  103,398
  108,297
  113,456
  118,887
  124,604
  130,619
  136,948
  143,604
  150,604
  157,964
Operating income, $m
  14,922
  15,542
  16,228
  16,980
  17,798
  18,684
  19,637
  20,659
  21,753
  22,919
  31,069
  32,388
  33,788
  35,271
  36,841
  38,501
  40,255
  42,107
  44,060
  46,121
  48,292
  50,580
  52,989
  55,526
  58,196
  61,005
  63,961
  67,070
  70,339
  73,777
EBITDA, $m
  23,702
  24,375
  25,120
  25,936
  26,825
  27,786
  28,821
  29,931
  31,118
  32,385
  33,733
  35,166
  36,685
  38,296
  40,000
  41,803
  43,707
  45,717
  47,839
  50,075
  52,433
  54,917
  57,533
  60,287
  63,186
  66,237
  69,446
  72,821
  76,371
  80,103
Interest expense (income), $m
  518
  1,689
  1,781
  1,883
  1,997
  2,122
  2,258
  2,405
  2,563
  2,733
  2,915
  3,108
  3,314
  3,533
  3,766
  4,012
  4,273
  4,548
  4,839
  5,147
  5,471
  5,813
  6,174
  6,553
  6,954
  7,375
  7,818
  8,284
  8,775
  9,291
  9,834
Earnings before tax, $m
  13,233
  13,762
  14,345
  14,983
  15,676
  16,426
  17,232
  18,096
  19,020
  20,005
  27,961
  29,074
  30,255
  31,506
  32,829
  34,229
  35,707
  37,267
  38,914
  40,649
  42,479
  44,406
  46,436
  48,572
  50,821
  53,188
  55,677
  58,295
  61,048
  63,943
Tax expense, $m
  3,573
  3,716
  3,873
  4,045
  4,233
  4,435
  4,653
  4,886
  5,135
  5,401
  7,549
  7,850
  8,169
  8,506
  8,864
  9,242
  9,641
  10,062
  10,507
  10,975
  11,469
  11,990
  12,538
  13,115
  13,722
  14,361
  15,033
  15,740
  16,483
  17,265
Net income, $m
  9,660
  10,046
  10,472
  10,937
  11,444
  11,991
  12,579
  13,210
  13,884
  14,603
  20,411
  21,224
  22,086
  22,999
  23,965
  24,987
  26,066
  27,205
  28,407
  29,674
  31,010
  32,416
  33,898
  35,458
  37,100
  38,827
  40,644
  42,555
  44,565
  46,678

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  121,362
  124,809
  128,623
  132,804
  137,353
  142,274
  147,573
  153,258
  159,337
  165,822
  172,726
  180,061
  187,844
  196,090
  204,818
  214,047
  223,797
  234,091
  244,953
  256,406
  268,478
  281,197
  294,593
  308,696
  323,539
  339,159
  355,591
  372,874
  391,050
  410,160
Adjusted assets (=assets-cash), $m
  121,362
  124,809
  128,623
  132,804
  137,353
  142,274
  147,573
  153,258
  159,337
  165,822
  172,726
  180,061
  187,844
  196,090
  204,818
  214,047
  223,797
  234,091
  244,953
  256,406
  268,478
  281,197
  294,593
  308,696
  323,539
  339,159
  355,591
  372,874
  391,050
  410,160
Revenue / Adjusted assets
  0.565
  0.565
  0.565
  0.565
  0.565
  0.565
  0.565
  0.565
  0.565
  0.565
  0.565
  0.565
  0.565
  0.565
  0.565
  0.565
  0.565
  0.565
  0.565
  0.565
  0.565
  0.565
  0.565
  0.565
  0.565
  0.565
  0.565
  0.565
  0.565
  0.565
Average production assets, $m
  56,159
  57,753
  59,518
  61,453
  63,558
  65,835
  68,287
  70,918
  73,731
  76,732
  79,926
  83,321
  86,922
  90,738
  94,776
  99,047
  103,559
  108,322
  113,348
  118,648
  124,234
  130,120
  136,318
  142,844
  149,713
  156,941
  164,544
  172,542
  180,952
  189,795
Working capital, $m
  -6,514
  -6,699
  -6,904
  -7,128
  -7,372
  -7,637
  -7,921
  -8,226
  -8,552
  -8,901
  -9,271
  -9,665
  -10,083
  -10,525
  -10,994
  -11,489
  -12,012
  -12,565
  -13,148
  -13,763
  -14,411
  -15,093
  -15,812
  -16,569
  -17,366
  -18,204
  -19,086
  -20,014
  -20,990
  -22,015
Total debt, $m
  32,972
  34,878
  36,988
  39,299
  41,815
  44,536
  47,467
  50,610
  53,972
  57,559
  61,376
  65,433
  69,737
  74,297
  79,123
  84,227
  89,619
  95,312
  101,318
  107,652
  114,328
  121,361
  128,769
  136,568
  144,776
  153,414
  162,501
  172,058
  182,109
  192,677
Total liabilities, $m
  67,113
  69,019
  71,129
  73,440
  75,956
  78,677
  81,608
  84,751
  88,113
  91,700
  95,517
  99,574
  103,878
  108,438
  113,264
  118,368
  123,760
  129,453
  135,459
  141,793
  148,469
  155,502
  162,910
  170,709
  178,917
  187,555
  196,642
  206,199
  216,250
  226,818
Total equity, $m
  54,249
  55,790
  57,494
  59,363
  61,397
  63,596
  65,965
  68,506
  71,224
  74,123
  77,208
  80,487
  83,966
  87,652
  91,554
  95,679
  100,037
  104,639
  109,494
  114,614
  120,010
  125,695
  131,683
  137,987
  144,622
  151,604
  158,949
  166,675
  174,799
  183,341
Total liabilities and equity, $m
  121,362
  124,809
  128,623
  132,803
  137,353
  142,273
  147,573
  153,257
  159,337
  165,823
  172,725
  180,061
  187,844
  196,090
  204,818
  214,047
  223,797
  234,092
  244,953
  256,407
  268,479
  281,197
  294,593
  308,696
  323,539
  339,159
  355,591
  372,874
  391,049
  410,159
Debt-to-equity ratio
  0.610
  0.630
  0.640
  0.660
  0.680
  0.700
  0.720
  0.740
  0.760
  0.780
  0.790
  0.810
  0.830
  0.850
  0.860
  0.880
  0.900
  0.910
  0.930
  0.940
  0.950
  0.970
  0.980
  0.990
  1.000
  1.010
  1.020
  1.030
  1.040
  1.050
Adjusted equity ratio
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  9,660
  10,046
  10,472
  10,937
  11,444
  11,991
  12,579
  13,210
  13,884
  14,603
  20,411
  21,224
  22,086
  22,999
  23,965
  24,987
  26,066
  27,205
  28,407
  29,674
  31,010
  32,416
  33,898
  35,458
  37,100
  38,827
  40,644
  42,555
  44,565
  46,678
Depreciation, amort., depletion, $m
  8,780
  8,833
  8,892
  8,956
  9,026
  9,102
  9,184
  9,272
  9,365
  9,465
  2,664
  2,777
  2,897
  3,025
  3,159
  3,302
  3,452
  3,611
  3,778
  3,955
  4,141
  4,337
  4,544
  4,761
  4,990
  5,231
  5,485
  5,751
  6,032
  6,327
Funds from operations, $m
  18,439
  18,879
  19,363
  19,894
  20,470
  21,093
  21,763
  22,482
  23,250
  24,069
  23,075
  24,001
  24,983
  26,024
  27,125
  28,288
  29,518
  30,816
  32,185
  33,629
  35,151
  36,754
  38,442
  40,219
  42,090
  44,058
  46,129
  48,307
  50,597
  53,005
Change in working capital, $m
  -165
  -185
  -205
  -224
  -244
  -264
  -284
  -305
  -326
  -348
  -371
  -394
  -418
  -443
  -468
  -495
  -523
  -553
  -583
  -615
  -648
  -683
  -719
  -757
  -797
  -838
  -882
  -928
  -976
  -1,026
Cash from operations, $m
  18,605
  19,064
  19,568
  20,118
  20,714
  21,357
  22,048
  22,787
  23,576
  24,417
  23,446
  24,395
  25,401
  26,466
  27,593
  28,784
  30,041
  31,368
  32,768
  34,244
  35,799
  37,436
  39,161
  40,976
  42,887
  44,897
  47,011
  49,234
  51,572
  54,030
Maintenance CAPEX, $m
  -1,825
  -1,872
  -1,925
  -1,984
  -2,048
  -2,119
  -2,195
  -2,276
  -2,364
  -2,458
  -2,558
  -2,664
  -2,777
  -2,897
  -3,025
  -3,159
  -3,302
  -3,452
  -3,611
  -3,778
  -3,955
  -4,141
  -4,337
  -4,544
  -4,761
  -4,990
  -5,231
  -5,485
  -5,751
  -6,032
New CAPEX, $m
  -1,421
  -1,595
  -1,765
  -1,935
  -2,105
  -2,277
  -2,452
  -2,630
  -2,813
  -3,001
  -3,194
  -3,394
  -3,601
  -3,816
  -4,039
  -4,270
  -4,512
  -4,763
  -5,026
  -5,300
  -5,586
  -5,885
  -6,198
  -6,526
  -6,869
  -7,228
  -7,604
  -7,998
  -8,410
  -8,843
Cash from investing activities, $m
  -3,246
  -3,467
  -3,690
  -3,919
  -4,153
  -4,396
  -4,647
  -4,906
  -5,177
  -5,459
  -5,752
  -6,058
  -6,378
  -6,713
  -7,064
  -7,429
  -7,814
  -8,215
  -8,637
  -9,078
  -9,541
  -10,026
  -10,535
  -11,070
  -11,630
  -12,218
  -12,835
  -13,483
  -14,161
  -14,875
Free cash flow, $m
  15,359
  15,597
  15,878
  16,199
  16,561
  16,961
  17,401
  17,880
  18,399
  18,958
  17,694
  18,336
  19,022
  19,753
  20,530
  21,354
  22,228
  23,153
  24,131
  25,166
  26,257
  27,410
  28,625
  29,906
  31,257
  32,679
  34,176
  35,752
  37,411
  39,156
Issuance/(repayment) of debt, $m
  1,686
  1,906
  2,109
  2,312
  2,516
  2,721
  2,930
  3,144
  3,362
  3,586
  3,818
  4,056
  4,304
  4,560
  4,827
  5,104
  5,392
  5,693
  6,006
  6,334
  6,676
  7,034
  7,408
  7,799
  8,209
  8,638
  9,087
  9,558
  10,051
  10,568
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  1,686
  1,906
  2,109
  2,312
  2,516
  2,721
  2,930
  3,144
  3,362
  3,586
  3,818
  4,056
  4,304
  4,560
  4,827
  5,104
  5,392
  5,693
  6,006
  6,334
  6,676
  7,034
  7,408
  7,799
  8,209
  8,638
  9,087
  9,558
  10,051
  10,568
Total cash flow (excl. dividends), $m
  17,045
  17,503
  17,987
  18,511
  19,076
  19,683
  20,331
  21,024
  21,761
  22,545
  21,511
  22,393
  23,326
  24,313
  25,356
  26,458
  27,620
  28,846
  30,138
  31,499
  32,933
  34,443
  36,033
  37,705
  39,465
  41,316
  43,263
  45,310
  47,462
  49,724
Retained Cash Flow (-), $m
  -1,366
  -1,541
  -1,705
  -1,869
  -2,033
  -2,200
  -2,369
  -2,541
  -2,718
  -2,899
  -3,086
  -3,279
  -3,479
  -3,686
  -3,901
  -4,125
  -4,358
  -4,601
  -4,855
  -5,120
  -5,396
  -5,685
  -5,988
  -6,304
  -6,635
  -6,982
  -7,345
  -7,726
  -8,124
  -8,542
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  15,679
  15,962
  16,282
  16,643
  17,043
  17,483
  17,963
  18,483
  19,043
  19,646
  18,426
  19,114
  19,847
  20,627
  21,455
  22,332
  23,261
  24,244
  25,283
  26,380
  27,537
  28,758
  30,045
  31,401
  32,830
  34,334
  35,918
  37,584
  39,337
  41,181
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  15,033
  14,613
  14,170
  13,703
  13,210
  12,688
  12,135
  11,552
  10,939
  10,300
  8,750
  8,157
  7,546
  6,925
  6,299
  5,675
  5,061
  4,465
  3,893
  3,352
  2,848
  2,386
  1,969
  1,599
  1,277
  1,002
  771
  581
  429
  310
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

The Procter & Gamble Company is focused on providing branded consumer packaged goods to the consumers across the world. The Company operates through five segments: Beauty; Grooming; Health Care; Fabric & Home Care, and Baby, Feminine & Family Care. The Company sells its products in approximately 180 countries and territories primarily through mass merchandisers, grocery stores, membership club stores, drug stores, department stores, distributors, baby stores, specialty beauty stores, e-commerce, high-frequency stores and pharmacies. It offers products under the brands, such as Olay, Old Spice, Safeguard, Head & Shoulders, Pantene, Rejoice, Mach3, Prestobarba, Venus, Cascade, Dawn, Febreze, Mr. Clean, Bounty and Charmin.

FINANCIAL RATIOS  of  Procter&Gamble (PG)

Valuation Ratios
P/E Ratio 15.4
Price to Sales 3.6
Price to Book 4.3
Price to Tangible Book
Price to Cash Flow 18.5
Price to Free Cash Flow 25.2
Growth Rates
Sales Growth Rate -0.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 2.1%
Cap. Spend. - 3 Yr. Gr. Rate -2.5%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 32.7%
Total Debt to Equity 57.2%
Interest Coverage 27
Management Effectiveness
Return On Assets 12.7%
Ret/ On Assets - 3 Yr. Avg. 8.9%
Return On Total Capital 17.5%
Ret/ On T. Cap. - 3 Yr. Avg. 12.1%
Return On Equity 27.2%
Return On Equity - 3 Yr. Avg. 18.5%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 50.9%
Gross Margin - 3 Yr. Avg. 50%
EBITDA Margin 25.5%
EBITDA Margin - 3 Yr. Avg. 24.2%
Operating Margin 21.5%
Oper. Margin - 3 Yr. Avg. 19.2%
Pre-Tax Margin 20.4%
Pre-Tax Margin - 3 Yr. Avg. 18.8%
Net Profit Margin 23.6%
Net Profit Margin - 3 Yr. Avg. 16.5%
Effective Tax Rate 23.1%
Eff/ Tax Rate - 3 Yr. Avg. 24.3%
Payout Ratio 47.2%

PG stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the PG stock intrinsic value calculation we used $66832 million for the last fiscal year's total revenue generated by Procter&Gamble. The default revenue input number comes from 0001 income statement of Procter&Gamble. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our PG stock valuation model: a) initial revenue growth rate of 2.6% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for PG is calculated based on our internal credit rating of Procter&Gamble, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Procter&Gamble.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of PG stock the variable cost ratio is equal to 78.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for PG stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for Procter&Gamble.

Corporate tax rate of 27% is the nominal tax rate for Procter&Gamble. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the PG stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for PG are equal to 81.9%.

Life of production assets of 31.5 years is the average useful life of capital assets used in Procter&Gamble operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for PG is equal to -9.5%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $52883 million for Procter&Gamble - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 2488.01 million for Procter&Gamble is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Procter&Gamble at the current share price and the inputted number of shares is $230.0 billion.

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COMPANY NEWS

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▶ Former P&G manager hired as CEO of manufacturing firm   [11:09AM  American City Business Journals]
▶ P&G launches ad campaign focused on equal pay   [Nov-20-18 12:56PM  American City Business Journals]
▶ P&G hailed for innovative products for sensitive skin   [11:17AM  American City Business Journals]
▶ P&G stock hits record high; is it time to buy or sell?   [01:07PM  American City Business Journals]
▶ Weekly CFO Sales Highlight   [Nov-18-18 02:47PM  GuruFocus.com]
▶ P&G CEO: Company wont be broken up   [12:04PM  American City Business Journals]
▶ P&G's Gillette going natural with Pure shave gel, cream   [11:15AM  American City Business Journals]
▶ Biz: Procter & Gamble CEO talks leadership at Duke business school   [05:05AM  American City Business Journals]
▶ Stock Market Today: Braving the Storm   [Nov-15-18 09:52PM  Investopedia]
▶ [$$] Corporate week in review, November 17   [09:50PM  Financial Times]
▶ P&G rival to end advertising claims following complaint   [12:51PM  American City Business Journals]
▶ Procter & Gamble won't be breaking up: CEO   [11:23AM  Yahoo Finance]
▶ [$$] JAB needs more than cosmetic improvement at Coty   [Nov-14-18 11:00PM  Financial Times]
▶ 7 Highest-Yielding Dow Dividend Stocks   [02:02PM  Kiplinger]
▶ P&G launches ad campaign with help of 'American Idol' champion   [11:42AM  American City Business Journals]
▶ P&G executive slated to help lead U.S. Golf Association   [06:00AM  American City Business Journals]
▶ P&G stock hits 52-week high   [Nov-13-18 04:44PM  American City Business Journals]
▶ Jim Cramer: Too Few Leaders, Too Many Clinkers   [Nov-12-18 07:01PM  TheStreet.com]
▶ P&G testing hair analysis app, social network   [01:34PM  American City Business Journals]
▶ [$$] Coty replaces chief and names new chairman   [Nov-11-18 08:44PM  Financial Times]
▶ P&G willing to change anything and everything, CEO says   [02:34PM  American City Business Journals]
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▶ P&G restructuring under pressure from Nelson Peltz   [10:34AM  Yahoo Finance Video]

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