Running The Numbers – Procter & Gamble ($PG)
Proctor & Gamble ($PG) is trading close to a 52-week low at US$58.76. We decided to run some numbers around the branded consumer goods company.
Valuecruncher valuation model of $PG with interactive assumptions
Valuecruncher produces a valuation of US$72.92 for $PG. This is a current valuation (an estimate of intrinsic value using a discounted cash flow model) not a target price. This valuation is 24.1% above the current share price of US$58.76.
Assumptions
- Revenue: Reuters aggregates 13analysts covering $PG and these analysts have mean estimates of 2009 revenues of US$88.4 billion. For our analysis we have used US$87.0 billion in 2009, US$91.0 billion in 2010 and US$94.5 billion in 2011.
- Profitability: We have used an EBITDA margin of 23.0% in 2009 rising to 24.0% in 2011. Reuters has $PG‘s EBITD margin at 24.5% last year and 23.5% over the last five-years.
- Capital Expenditure: We have assumed capital expenditures of US$3.5 billion in 2009 and 2010 rising to US$3.75 billion in 2011 and US$3.5 billion beyond that.
- Discount Rate: 8.0%.
- Terminal Growth Rate: 3.0%.
Our analysis incorporates the cash and debt the $PG balance sheet – Valuecruncher calculates a net debt number.
Play with our assumptions – what does your analysis say?
Disclosure: None
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