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EQUITYTRADINGREPORTRyerson Paper Trading ClubProcter and Gamble (NYSE:PG) – BuyBy Noah Hazlett, Neil Jonatan, Rottem Maor, Liam HennessyFebruary 21, 2021Trading Report #14
Executive LetterDear reader,The purpose of our reports is to demonstrate our executives’ deep knowledge and understanding of investments, the financial industry,financial indicators, risk management, etc.All reports are approved, fact-checked and edited by Founding President Neil Jonatan and Co-V.P.s of Finance Rottem Maor and LiamHennessy.Disclaimer: The analyses and conclusions of Ryerson Paper Trading Club (“RPTC") contained in this presentation are based on publiclyavailable information. RPTC recognizes that there may be confidential information in the possession of the companies discussed in thepresentation that could lead these companies to disagree with RPTC’s conclusions. This presentation and the information containedherein is not a recommendation or solicitation to buy or sell any securities.The analyses provided may include certain statements, estimates and projections prepared with respect to, among other things, thehistorical and anticipated operating performance of the companies, access to capital markets and the values of assets and liabilities. Suchstatements, estimates, and projections reflect various assumptions by RPTC concerning anticipated results that are inherently subject tosignificant economic, competitive, and other uncertainties and contingencies and have been included solely for illustrative purposes. Norepresentations, express or implied, are made as to the accuracy or completeness of such statements, estimates or projections or withrespect to any other materials herein. Actual results may vary materially from the estimates and projected results contained herein.The sole responsibility for the content of this publication lies with the authors. Its contents do not reflect the opinion of RPTC. RPTCassumes no responsibility or liability for any error, inaccuracy, omission or comment contained in this publication or for any use that maybe made of such information by the reader.Sincerely,Neil JonatanRottem MaorFounding PresidentLiam HennessyCo-V.P. of FinanceCo-V.P. of Finance
Investment OverviewKey FinancialsTickerShare Price52 Week RangeMarket CapitalizationForward P / ETotal Debt / EquityForward Dividend YieldNYSE: PG 127.12 94.34 – 146.92 (USD) 304.19B (USD)21.3064.072.46%Business SummaryProcter and Gamble is a global conglomerate thatspecializes in providing consumer packaged goods. It hasfive operating segments where most of its products inthose segments are considered non-durable goods.Some of the more known brand’s P&G provides are OldSpice, Tide, Head and Shoulders, and Herbal Essences.P&G is considered an umbrella company because itmarkets and sells many brands under the Procter andGamble name.52 Week PerformanceAnnual Revenue ( millions)NYSE:PG15014013012011010090The Procter & Gamble Company n-30- Jun-30- Jun-30- Jun-30- Jun-30- Dec-31201620172018201920202020
Fundamental AnalysisS.W.O.T AnalysisIn this case, the SWOT analysis is essential to develop an understanding of Procter and Gamble.Strengths: Procter and Gamble has created multiple household brand names such as Tide, Old Spice and Pantene. These brands have created astrong brand equity in response to P&G brands. This strong brand equity has showed up on P&G’s income statement as they now boast annualrevenues of seventy-four billion dollars. P&G has produced different variations of their products in order so that they can adapt to the differentmarkets that they are selling to, this allows them versatility with the types of products they produce and allows them to accommodate to theirdifferent target markets. P&G also has a strongg research and development department that allows them to create new products and modifyexisting products for future markets.Weakness: P&G’s products are easily replicable and that allows for some bad actors to create counterfeit versions of the products that they sell.P&G needs to lookout for this as this is more prevalent in emerging markets where it is easier to manufacture counterfeit goods. Being a globalcorporation P&G faces increasing competition from domestic brands on the inside and outside of their main markets. These domestic competitorscan have an advantage since they serve a smaller segment of the global market and do not have alter their products to fit other markets as wellas worry about global supply chain disruptions.Opportunities: P&G can draw from their cash-pile to buy successful competitors that threaten the share of the market that they hold. Acquiringthese brands can allow the company to strengthen their name and brand image by deploying the successful marketing strategies that they haveused for their Gillette or Tide product lines and strengthen their already strong brand equity. Diversification has been a chief idea of globallyleading companies. P&G can diversify out of their non-durable product emphasis into new emerging technologies. P&G has an opportunity torevitalize some of their product lines to be more environmentally friendly as the current trends in society suggests this could be a winning issueand marketing campaign for the company.Threats: P&G faces a new threat from retailers as they are increasingly trying to develop competing brands. A great example of this is Amazon(NASDAQ: AMZN) because Amazon has developed many competing product lines and is continuing to expand them through M&A this poses athreat as Amazon also has the ability to prioritize their own brands in their marketplace.
Technical AnalysisNYSE: PGTechnical analysis for Procter and Gamble uses Bollinger Bands and the Relative Strength Index, RSI.As you can see the share price is almost at the lower Bollinger band (One standard deviation from the moving average)indicating it is oversold.Furthermore, it is evident that the RSI has dove below 40. This signals that the stock is fairly oversold.
Investment ValuationComparative ValuationWith a lower-than-average EV to Sales ratio, Price-to-earnings ratio and EV to EBITDA ratio, Procter and Gamble would be consideredundervalued. Furthermore, the company has been able to operate at a higher profit margin and generate more earnings than the industryaverage during the pandemic. Procter and Gamble also significantly outperforms the industry average in earnings solidifying its market sharein the industry.
RecommendationThesisAs a student run investment club, RPTC’s purpose is torecommend investments in companies that are positioned togrow in value and sell those that have a negative outlook.Our thorough analysis has led us to the conclusion thatProcter and Gamble. is going to increase in price in themedium and long term. We believe that because of thecompany’s strong market share and fundamentals coupledwith oversold indicators that the stock is a solid buy.Risk Management StrategyOptimal Execution Price: 127.12Stop Loss: 120.764Targets: 1st – 137.29 (8% gain)2nd – 143.65 (13% gain)Risk/Reward Ratio:5% : 8% - 13%Portfolio Allocation: 10%SummaryBUY at 127.12Implied Return on Investment (Buy): 11%Target Visualization
Citations(1) Yahoo ls?p PG(2) is-procter-gamble/(3) Capital /ciqdotnet/company.aspx?leftlink true&companyId 33328(4) Trading chnicals/
In this case, the SWOT analysis is essential to develop an understanding of Procter and Gamble. Strengths: Procter and Gamble has created multiple household brand names such as Tide, Old Spice and Pantene. These brands have created a strong brand equity in response to P&G brands. This strong brand equity has showed up on P&G’s income statement as they now boast annual revenues of
