PG – Market expectations are for Uniform ROA to expand, but management may have concerns about margins, brand strategy, and acquisitions
February 4, 2022
- Procter & Gamble (PG) currently trades above corporate and historical averages relative to Uniform earnings, with a 30.9x Uniform P/E (Fwd. V/E’).
- At these levels, markets are pricing in expectations for Uniform ROA to expand to 49%, accompanied by 3% Uniform asset growth.
- Meanwhile, analysts expect Uniform ROA to maintain 35% levels through 2023, accompanied by immaterial Uniform asset growth.
- If sustained going forward, these levels would imply a stock price closer to $95, representing approximately 40% equity downside for the firm.
- Moreover, the firm’s most recent earnings call suggests management may have concerns about margins, brand strategy, and acquisitions.