PG – Market expectations are for Uniform ROA to expand, but management may have concerns about growth, supply chain disruptions, and productivity

January 6, 2022

  • Procter & Gamble (PG) currently trades above corporate and historical averages relative to Uniform earnings, with a 30.6x Uniform P/E (Fwd. V/E’).
  • At these levels, markets are pricing in expectations for Uniform ROA to expand to 48%, accompanied by 3% Uniform asset growth.
  • Meanwhile, analysts expect Uniform ROA to maintain 34% levels through 2023, accompanied by immaterial Uniform asset growth.
  • If sustained going forward, these levels would imply a stock price closer to $94, representing approximately 42% equity downside for the firm.
  • Moreover, the firm’s most recent earnings call suggests management may have concerns about growth, supply chain disruptions, and productivity.

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