Comparative Study: Procter & Gamble And Industry Competitors In Household Products Industry
In today's rapidly changing and highly competitive business world, it is vital for investors and industry enthusiasts to carefully assess companies. In this article, we will perform a comprehensive industry comparison, evaluating Procter & Gamble (NYSE:PG) against its key competitors in the Household Products industry. By analyzing important financial metrics, market position, and growth prospects, we aim to provide valuable insights for investors and shed light on company's performance within the industry.
Procter & Gamble Background
Since its founding in 1837, Procter & Gamble has become one of the world's largest consumer product manufacturers, generating more than $80 billion in annual sales. It operates with a lineup of leading brands, including more than 20 that generate north of $1 billion each in annual global sales, such as Tide laundry detergent, Charmin toilet paper, Pantene shampoo, and Pampers diapers. Sales outside its home turf represent more than half of the firm's consolidated total.
| Company | P/E | P/B | P/S | ROE | EBITDA (in billions) | Gross Profit (in billions) | Revenue Growth |
|---|---|---|---|---|---|---|---|
| Procter & Gamble Co | 28.63 | 8.18 | 5.07 | 6.2% | $4.85 | $10.18 | -0.1% |
| Colgate-Palmolive Co | 29.50 | 672.20 | 4.18 | 414.16% | $1.25 | $3.07 | 4.89% |
| Kimberly-Clark Corp | 21.59 | 43.27 | 2.44 | 49.91% | $0.84 | $1.81 | -2.05% |
| Church & Dwight Co Inc | 32.30 | 5.95 | 4.31 | 5.79% | $0.4 | $0.71 | 3.92% |
| Clorox Co | 72.64 | 61.62 | 2.88 | 103.1% | $0.35 | $0.88 | -5.75% |
| Reynolds Consumer Products Inc | 17.77 | 3.13 | 1.72 | 4.82% | $0.17 | $0.26 | -1.06% |
| WD-40 Co | 51.80 | 16.07 | 6.23 | 9.02% | $0.03 | $0.08 | 9.4% |
| Spectrum Brands Holdings Inc | 23.53 | 1.24 | 1.24 | 0.28% | $0.08 | $0.3 | 5.97% |
| Central Garden & Pet Co | 14.17 | 1.30 | 0.63 | 5.14% | $0.14 | $0.32 | -2.63% |
| Energizer Holdings Inc | 230.57 | 18.78 | 0.80 | -27.84% | $0.01 | $0.28 | 0.29% |
| Oil-Dri Corp of America | 12.82 | 2.41 | 1.41 | 3.08% | $0.02 | $0.03 | 5.88% |
| Average | 50.67 | 82.6 | 2.58 | 56.75% | $0.33 | $0.77 | 1.89% |
After a detailed analysis of Procter & Gamble, the following trends become apparent:
With a Price to Earnings ratio of 28.63, which is 0.57x less than the industry average, the stock shows potential for growth at a reasonable price, making it an interesting consideration for market participants.
Considering a Price to Book ratio of 8.18, which is well below the industry average by 0.1x, the stock may be undervalued based on its book value compared to its peers.
The Price to Sales ratio of 5.07, which is 1.97x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.
The company has a lower Return on Equity (ROE) of 6.2%, which is 50.55% below the industry average. This indicates potential inefficiency in utilizing equity to generate profits, which could be attributed to various factors.
Compared to its industry, the company has higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $4.85 Billion, which is 14.7x above the industry average, indicating stronger profitability and robust cash flow generation.
With higher gross profit of $10.18 Billion, which indicates 13.22x above the industry average, the company demonstrates stronger profitability and higher earnings from its core operations.
The company's revenue growth of -0.1% is significantly lower compared to the industry average of 1.89%. This indicates a potential fall in the company's sales performance.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio is a measure that indicates the level of debt a company has taken on relative to the value of its assets net of liabilities.
Considering the debt-to-equity ratio in industry comparisons allows for a concise evaluation of a company's financial health and risk profile, aiding in informed decision-making.
By evaluating Procter & Gamble against its top 4 peers in terms of the Debt-to-Equity ratio, the following observations arise:
Procter & Gamble demonstrates a stronger financial position compared to its top 4 peers in the sector.
With a lower debt-to-equity ratio of 0.67, the company relies less on debt financing and maintains a healthier balance between debt and equity, which can be viewed positively by investors.
Key Takeaways
For Procter & Gamble, the PE and PB ratios are low compared to peers, indicating potential undervaluation. However, the high PS ratio suggests overvaluation based on revenue. The low ROE and revenue growth, along with high EBITDA and gross profit, may indicate operational efficiency but limited growth potential within the Household Products industry.
This article was generated by Benzinga's automated content engine and reviewed by an editor.