The Procter and Gamble Company (Ticker Symbol: PG) released quarterly revenue and guidance that was better than the street was looking for. The American multinational consumer goods company reported an earnings per share beat of $1.10 per share vs. Wall Street analysts’ expectations of $1.05 per share. Additionally, the company reported a revenue beat of $17.09 billion vs. Wall Street analysts’ expectations of $16.86 billion. P&G owns the Gillette brand, which has been struggling due to the increase of men growing beards and also the addition of competitors like the Dollar Shave Club and other less expensive shaving subscription services.
Above is the longer-term weekly chart of P&G’s stock price over the past five years. In 2014, the stock had a positive start finding support at its 100-day moving average multiple times before rallying higher finding some resistance just above the $90.00 price level. Unfortunately, for shareholders at the start of 2015, the stock had a rough spell of bad earnings and revenue releases that sent the stock trading lower over the next two quarters. The stock found support around the $64.00 price level and put in the most oversold rating its Relative Strength Index in over five years. At the start of 2016, the stock broke through its downtrend and began to steadily ease higher.
During the entirety of 2017, P&G’s stock began to for a long term topping formation called a Head and Shoulders reversal pattern. Traders and investors sometimes look at Head and Shoulder patterns for a possible pause within the current trend, which can, at times, lead to a reversal as occurred in P&G’s’ case. Some traders use what’s called a “measured move” to try and project where the stock might go in the future based on breakouts from technical formations. In P&G’s case, one would take the top price from the head of the pattern (roughly $95) and the price of the neckline from the pattern (roughly $85) then subtract them to get the difference ($10). The difference is then projected from the neckline in the direction of the breakout to project the price of the measured move (Neckline – Difference = Measured Move). In P&G’s case, the projected price target from the Head and Shoulders pattern was roughly $75.00, which it achieved shortly after it broke down from that pattern in the second quarter of 2018. Since then the stock has been on a tear rallying nearly 75% from its lows and trading to an all-time high of 123.43 on September 3rd, 2019.
(Chart above courtesy of www.tipranks.com)
Based on a survey of 12 analysts offering 12-month price targets, the average price target for Procter and Gamble’s stock is $122.67 According to that number, the stock is priced at a minor discount relative to Wall Street analysts and could be considered slightly undervalued around current levels near $122.02.
Procter and Gamble stated that it expects its fiscal 202 revenue growth to be within the range of 3%-4% which is up from its previous forecast of 3.5%. Long-term shareholders have extremely benefited from Procter and Gamble’s dividend and its capital appreciation over the years.
Investors in Procter and Gamble should look to their next earnings release on October 20th for fresh news within the company.