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Procter & Gamble Co. (NYSE:PG) discussed its Q4 2013 earnings yesterday. Based on preliminary financial results for the year ended June 30, 2013, we will analyze PG's performance over the last 12 months (unless stated otherwise). Our analysis is peer-based and we will analyze PG compared to the following companies: Johnson & Johnson (NYSE:JNJ), L'Oreal S.A. (OR), Colgate-Palmolive Co. (NYSE:CL), Reckitt Benckiser Group Plc (OTCPK:RBGPF), Kimberly-Clark Corp. (NYSE:KMB), Estee Lauder Cos. Cl A (NYSE:EL), Henkel AG & Co. KGaA ADS (OTCPK:HENKY), Clorox Co. (NYSE:CLX), Church & Dwight Co. (NYSE:CHD), and Unilever Plc (ULVR).

The table below shows the preliminary results, along with the recent trend for revenues, net income, and returns.

Annual (USD million)

2013-06-30

2012-06-30

2011-06-30

2010-06-30

2009-06-30

Revenues

84,167.0

83,680.0

82,559.0

78,938.0

79,029.0

Revenue Growth %

0.6

1.4

4.6

(0.1)

(5.4)

Net Income

11,312.0

9,169.0

11,797.0

10,946.0

11,293.0

Net Income Growth %

23.4

(22.3)

7.8

(3.1)

(6.5)

Net Margin %

13.4

11.0

14.3

13.9

14.3

ROE %

17.3

13.9

18.3

17.6

17.1

ROA %

8.3

6.8

8.9

8.3

8.1

Long-Term Strategic Bet?

While Procter & Gamble's revenue growth has been below the peer median in the last few years (2.2% vs. 4.0%, respectively, for the past three years), the market still gives the stock an about peer median P/E ratio of 21.1. The market seems to see the company as a long-term strategic bet. PG's annualized rate of change in capital of 3.8% over the past three years is less than its peer median of 5.6%. This below median investment level has also generated a less-than-peer median return on capital of 11.3%, averaged over the same three years. This outcome suggests that the company has invested capital relatively poorly and now may be in maintenance mode.

Earnings Quality

The company's net income margin for the last 12 months is around the peer median (13.4% vs. the peer median of 12.0%). This average margin, combined with a level of accruals that is around the peer median (4.2% vs. the peer median of 3.7%), suggests there possibly isn't too much accrual movement flowing into the company's reported earnings. Procter & Gamble's accruals over the last 12 months are positive, suggesting a buildup of reserves. However, this level of accruals is also around the peer median and suggests the company is recording a proper level of reserves compared to its peers.

Accrual Trend Charts

Company Profile

Procter & Gamble Co. provides branded consumer packaged goods to its consumers around the world. It operates through the following segments: Beauty, Grooming, Healthcare, Fabric Care and Home Care, and Baby Care and Family Care. The company was founded by William Procter and James Gamble in 1837 and is headquartered in Cincinnati, Ohio.

Proctor & Gamble: Fundamental Analysis Report Download (email registration required)

Disclaimer

Source: Is Procter & Gamble Co. A Strategic Bet?