Fundamentals
Bender Trust ProjectLittle Investment Bankers of RutgersRutgers University
Josselinne Rodriguez, Michael Kornblum, & Dor Alaluf
Dec. 2011
• A Fortune 500 American multinational corporation manufactures of a wide range of consumer goods
• Headquartered in downtown Cincinnati, Ohio • Serves approximately 4.4 billion consumers around the world
with strong portfolio of trusted, quality, leading brands. • Known globally for its household and personal goods in the
following categories: • Beauty products (e.g. Gillette, Old Spice, CoverGirl)• Health & Well-Being (e.g. Crest, Oral-B)• Household Care (e.g. Ace, Tide, Duracell)
• Continuously expands its products offering through in-house development and acquisitions
Procter & GambleCompany Overview
Beauty34%
Health & Wellbeing18%
Household Care48%
Breakdown by Sales (2010)
Procter & GambleCompany Overview
Value Trends
Procter & GambleStock Information
2010 A 2011 E 2012 EEPS 3.67 4.19 4.58
P/E 17.24 15.10 13.82
S&P EPS 77.35 89.55 98.14
S&P P/E 16.26 14.05 12.82
Relative P/E 106% 107% 108%
• Symbol (NYSE): PG • Current Price (11/25/2011): $61.00• Volume (11/25/2011): 4,734,711• 52 Week Range: 57.56 - 67.72• S&P 500: 1,257.81
Procter & GambleStock Behavior Chart
Procter & GamblePorter’s 5 Forces Analysis
• Mass merchandisers• Grocery stores• Membership club stores• Drug stores• Neighborhood stores
Average consumer
Problem: High dependency on mass consumers
Procter & GambleBuyers
• Suppliers: 6 of the top 80,000 are:• Havpak Inc.• Hayco Ltd.• Nelson Packaging Company Inc.• Nippon Shokubai Company Ltd.• Novozymes• Pegas Nonwovens
• Strong codependent supplier relationship
Procter & GambleSuppliers
Barriers to EntryEntrance
• Brand-building• Large and diverse product range• Consumer confidence and loyalty in brand• Understanding of consumer needs as a point for innovation more production more consumption more profits
Threats to Market Share
• Niche market firms Example: Mac vs. Cover girl
• Lack of presence in emerging markets (i.e. BRIC nations)• Due to economic downturns, consumer spending has
decreased globally.
• Large number of substitutes• Unilever (UL)• L’Oreal • Kimberly-Clarke• Clorox Company (CLX)
However• Continuing product differentiation• Strong research & development division• Go-to market capabilities always looking to expand & develop
with consumer needs as a guide
Procter & GambleSubstitutes
Leading Household ProductsRanked by sales
Company Sales(MIL $)
Net Income(MIL $)
Procter & Gamble
70,029 11,291
Unilever 57,118 7449L’Oreal 24,726 2,909Kimberly- Clark 19,145 1,690Colgate-Palmolive
15,330 1,957
Kao 12,993 656Avon 19589 875Reckitt Benckiser
9,161 1,654
Estee Lauder 7,324 218Clorox 5,450 537Church &Dwight 2,422 195Alberto-Culver 1443 106Revlon 1,347 58
Procter & GambleIndustry Competition
Significant competition in 3 Industries where P&G offers products and services in:
• Advantages:• Strong consumer presence and confidence• Strong relations with suppliers • i.e. Target, Walmart
• Diverse product range in all 3 sectors• Large market share
• Disadvantages:• Needs international expansion• No strong online presence• Loss of local jobs, outsourcing manufacturing and back-office
operations work overseas cheap labor
Procter & GambleIndustry Competition
BUY
Stock Recommendation: