Procter & Gamble (PG) has made some management missteps in recent years, which have led significant underperformance compared to blue-chip peers like Kimberly-Clark (KMB), The Clorox Company (CLX), and Colgate-Palmolive (CL). These companies have grown earnings significantly faster than P&G.
CLX Earnings Per Share TTM data by YCharts
As a result, P&G's stock performance has been rather depressing.
CLX data by YCharts
The company offered up a softer forecast for the July-September quarter than the Street was looking for, at 91-97 cents per share versus the consensus estimate of $1.03. For the full 2013 fiscal year just underway, P&G expects earnings between $3.80 and $4.00 per share; the consensus call is right at the midpoint, $3.90.
So should investors be looking to pick up shares of P&G? Well, it doesn't look particularly cheap, but neither do its peers.
PG PE Ratio data by YCharts
P&G certainly isn't as phenomenal a value as it was a few years ago, but according to Don Yacktman, long-term investors would do well to check it out:
Most short-term investors would probably shy away from it; long-term investors would probably look and say this is a great bargain long term and a great buying opportunity.
One of the key challenges remaining for P&G is the tricky balancing act of pricing. While higher commodity costs have been nibbling at P&G's bottom line, price increases have caused some consumer backlash and contributed to a loss in market share. Nevertheless, most analysts believe P&G's strong brands will help it continue its long-term success record.
P&G is well-known as a dividend champion, and the earnings report did reveal one more important factor: the company is reversing a previous decision to not buy back shares, initiating a $4B buyback for this fiscal year, which represents roughly 2.2% of current market cap.