Is Procter & Gamble Company (PG) overvalued?
On Equity Rank's model estimate, PG trades 14% above its fair value. Procter & Gamble Company (PG) last closed at $165.40; the multi-method model fair value is $145.01.
| Price | Model fair value | Price vs model |
|---|---|---|
| $165.40 | $145.01 | 14% above |
What the answer rests on
- 1 of 10 valuation methods put PG's value above its price and 9 put it below, so the methods mostly agree.
- To justify today's price, PG's free cash flow would need to grow about 2.4% a year for ten years (a reverse discounted cash flow). Over the last three years it actually grew 3.2% a year.
- PG trades at 25.2 times its last year's earnings, against a median of 17.8 for 47 profitable Consumer Staples companies.
- Over the past year the price sat below the model fair value on 1% of trading days. The gap ranged from 8% below to 67% above the model fair value.
Read this before relying on it
The model fair value is an estimate from published financial statements. It is not a forecast of where the price goes, and it can be wrong. Within 10% either side we call it close to fair value: valuation models are not precise enough to read more into a smaller gap. Our own lists have no proven edge over the market yet; the live record shows every result, misses included.
Every valuation method behind PG's fair value · What prices assume · Other companies