P&G’s performance is mediocre in recent years; part of the reasons is because the acquired Gillette business in year 2005 has been a drag on P&G’s top line, not a boost. ROE dropped from 40% before the acquisition to around 19% after 2005 till now.
I studied the most recent 10-Q report, and there is literally nothing to be excited about. The stock’s price hovered at $63 range for quite some time.
However, on 02/23, Procter & Gamble Co announced that it plans to cut a total of 5,700 nonmanufacturing jobs as part of a new plan to reduce costs by $10 billion by the end of fiscal 2016. P&G had already said it would cut 1,600 positions in the current fiscal year. On Thursday, it said it would cut another 4,100 jobs during fiscal 2013, which begins in July. This news brought excitement to the market, since people believe this plan will help P&G make another leap forward. The stock has been upgraded twice, and the current market price is $67.
I strongly believe that this stock is a solid one that worth being held forever (both for capital growth and for dividend earnings). However, at current market surge, I tend to believe that the price is too high for me to go in. I’d rather wait till it cools down a little bit. I believe P&G’s performance in this fiscal year won’t be very good. When the next quarter result comes out, the market might be leak out a chance for patient buyers to go in. I still think $63 or lower is a good entry point.
Disclosure: None.
No comments:
Post a Comment