With competition from online stores such as Amazon and Alibaba, consumer goods companies like Procter and Gamble Company [NYSE: PG] has to pump more capital in innovations, marketing and investment to counter a softening industry.
P&G is known for its strong brand recognition and diversified portfolio. The company’s shares have outperformed the industry in the last six months and currently trades at US$90.47 on the market below its fair value of US$96.
The Cincinnati native has not been garnering any much enthusiasm among investors. The stock’s momentum has been very slow and is quite evident in its trading volume on the market. Over the past month, PG’s trading volume was 7.94% below its usual volume over the year.
Measuring PG’s volatility on the market would allow an investor the opportunity to decide whether this stock is a good buy or not, based on one’s risk appetite and ability to accept losses.
A stock beta is used to measure a stock’s volatility. If a stock’s beta is below the market beta, then this means the stock is less risky, and there is not much movement in the stock price.
The lacklustre performance of a stock price tends to turn off a lot of investors, and with a beta of 0.48 and market beta of 1, Procter and Gamble can be considered as a non-volatile stock.
There is no doubt that PG performed well on the market in 2016 as their financials can prove it.
Pretax margins, which is a company’s earnings after they have paid all operating costs, increased by 20% from previous years.
The unexpected improvement made investors optimistic that 2017 would have been even better but it was not. The pretax margin for 2017 was the same 20%.
Do you think 2018 will be any different?
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