Competitor Analysis: Evaluating Procter & Gamble And Competitors In Household Products Industry

In today's fast-paced and highly competitive business world, it is crucial for investors and industry followers to conduct comprehensive company evaluations. In this article, we will delve into an extensive industry comparison, evaluating Procter & Gamble PG in relation to its major competitors in the Household Products industry. By closely examining key financial metrics, market standing, and growth prospects, our objective is to provide valuable insights and highlight company's performance in 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. P&G sold its last remaining food brand, Pringles, to Kellogg in calendar 2012. Sales outside its home turf represent around 53% of the firm's consolidated total.

By conducting a comprehensive analysis of Procter & Gamble, the following trends become evident:

• A Price to Earnings ratio of 27.54 significantly below the industry average by 0.9x suggests undervaluation. This can make the stock appealing for those seeking growth.

• Considering a Price to Book ratio of 8.08, which is well below the industry average by 0.12x, the stock may be undervalued based on its book value compared to its peers.

• The stock's relatively high Price to Sales ratio of 4.96, surpassing the industry average by 1.91x, may indicate an aspect of overvaluation in terms of sales performance.

• With a Return on Equity (ROE) of 7.6% that is 14.55% below the industry average, it appears that the company exhibits potential inefficiency in utilizing equity to generate profits.

• With higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $5.54 Billion, which is 16.29x above the industry average, the company demonstrates stronger profitability and robust cash flow generation.

• With higher gross profit of $10.34 Billion, which indicates 12.92x above the industry average, the company demonstrates stronger profitability and higher earnings from its core operations.

• The company's revenue growth of 0.63% exceeds the industry average of 0.51%, indicating strong sales performance and market outperformance.

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.

In terms of the Debt-to-Equity ratio, Procter & Gamble can be assessed by comparing it to its top 4 peers, resulting in the following observations:

• Procter & Gamble is in a relatively stronger financial position compared to its top 4 peers, as evidenced by its lower debt-to-equity ratio of 0.65.

• This implies that the company relies less on debt financing and has a more favorable balance between debt and equity.

Key Takeaways

For Procter & Gamble, the PE and PB ratios are low compared to peers in the Household Products industry, indicating potential undervaluation. However, the high PS ratio suggests the stock may be overvalued based on revenue. In terms of ROE, EBITDA, gross profit, and revenue growth, Procter & Gamble shows high performance levels compared to industry peers, reflecting strong operational efficiency and growth potential.

This article was generated by Benzinga's automated content engine and reviewed by an editor.