PROCTER

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PROCTER GAMBLE

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GROUP 8
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P Gs PROFILE

• Started as a small, family business in 1837.
• Initially, P G operated as a soap and candle
  company out of Cincinnati, Ohio.
• Since their establishment in the 1830s, P G
  has expanded to more than 250 brands.
• Since their expansion, they accumulated five
  billion consumers worldwide.

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CURRENT BOARD STRUCTURE
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WHAT THEY SELL

• Baby, Feminine and Family Care
• Fabric and Home Care
• Health Care
• Beauty Care
• Food and Beverage

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TOP SELLERS

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Where They Sell
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2002 NET SALES BY BUSINESS SECTOR
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MARKET SHARE IN THE HOUSEHOLD PRODUCT INDUSTRY
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GROWTH RATE RATIO
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FINANCIAL CONDITION RATIOS
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Holding Period Ratio

• 2003- 0.012989922
• 2002- 0.423510972
• 2001- 0.148898678
• 2000- -0.341540905
• It can be concluded that since the holding period
  for the past three years is positive, P Gs
  stock price is currently underpriced and
  therefore, it can be estimated that it will
  increase to approximately 98 by the end of the
  year.

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Beta

• Currently P G has a 0.186113479 Beta. In 2002
  the Beta was 0.013613347, 2001 it was
  0.260422086, and in 2000 it was 0.354961555.
• From this data it can be concluded that PG
  currently has minimal or low risk.

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MODEL 2 WITH TAX

• According to the debt ratio of Procter Gamble,
  the capital structure has not had much change.
  Comparing the last three years of the data, one
  can see that there was no significant change.
  There was a 1.04 change from 2000 to 2001 and a
  1.8 change from 2001 to 2002. The actual ratio
  (Debt/Debt Equity Preferred Stock), was as
  follows 63, 62, and 61 respectively (2000
  2001 2002).

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SPECIFIC NEWS
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Increase in Preferred Stock Dividend

• On July 8th 2003, PG announced increase in
  preferred stock dividends
• The stock price dropped from 90.79 to 90.10
• The stock price should have increase with the
  increase of the preferred stock dividend but did
  not.
• The adverse effect concludes that there was a
  magnitude issue (another event or announcement)
  that occurred at the same time

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Non-Specific News
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Federated, PG alter travel to Asia over SARS

• PGs spokeswoman, Linda Ulrey, told CBS Market
  Watch that U.S. business travelers were
  recommended against traveling to Asia
• Stock prices dropped from 90.13 to 89.40
• The reaction died down in approximately three days

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5 Years Price Chart
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CONCLUSION

• Procter and Gambles financials are fundamentally
  strong considering the current US economy. PGs
  P/E ratio is higher than its sectors, and it is
  in line with the industry average now and for the
  past five years. Furthermore, PG sells at
  around an 18 premium to the SP 500 on forward
  earnings estimates and just below one standard
  deviation above its average.

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Therefore,

• In consideration of the present market
  environment, we estimate that Procter and Gamble
  will achieve 5 sales and 10 earnings growth
  over the next five years. By the end of this
  year their stock price will reach around 98.00 a
  share. It appears that PG is a good stock pick
  for some who is risk adverse and is looking for a
  long-term portfolio stock. We are maintaining a
  BUY rating on Procter shares.