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

Amidst the fast-paced and highly competitive business environment of today, conducting comprehensive company analysis is essential for investors and industry enthusiasts. In this article, we will delve into an extensive industry comparison, evaluating Procter & Gamble PG in comparison to its major competitors within the Household Products industry. By analyzing critical financial metrics, market position, and growth potential, our objective is to provide valuable insights for investors and offer a deeper understanding of 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.

After thoroughly examining Procter & Gamble, the following trends can be inferred:

• With a Price to Earnings ratio of 27.49, which is 0.89x 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 8.06, which is well below the industry average by 0.12x, the stock may be undervalued based on its book value compared to its peers.

• With a relatively high Price to Sales ratio of 4.95, which is 1.9x the industry average, the stock might be considered overvalued based on sales performance.

• With a Return on Equity (ROE) of 7.6% that is 14.76% below the industry average, it appears that the company exhibits potential inefficiency in utilizing equity to generate profits.

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

• With higher gross profit of $10.34 Billion, which indicates 12.77x above the industry average, the company demonstrates stronger profitability and higher earnings from its core operations.

• The company's revenue growth of 0.63% is significantly below the industry average of 0.79%. This suggests a potential struggle in generating increased sales volume.

Debt To Equity Ratio

The debt-to-equity (D/E) ratio measures the financial leverage of a company by evaluating its debt relative to its equity.

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 analyzing Procter & Gamble in relation to its top 4 peers based on the Debt-to-Equity ratio, the following insights can be derived:

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

• This suggests that the company has a more favorable balance between debt and equity, which can be perceived as a positive indicator by investors.

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 that the stock may be overvalued based on revenue. In terms of profitability, the low ROE and revenue growth, along with high EBITDA and gross profit, indicate mixed performance compared to industry peers.

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