Procter & Gamble: Does The Business Justify The Valuation?

Procter & Gamble (PG) is one of the quintessential companies when you begin explaining the concept of dividend growth investing. The business model itself is simple: (1) make consumable goods (2) get them in front of potential buyers (3) wash, rinse, repeat. That business model has served the company well and has allowed them to have 17 brands that are first or second in market share.

Some of the brands under the Procter & Gamble umbrella include Tide, Pampers, Bounty, Charmin, Puffs, Febreze, Mr. Clean, Crest, Oral-B, Gillette, Old Spice, Head & Shoulders, Downy, Prilosec, Vicks and many more.

Procter & Gamble is organized into 5 business segments: beauty, grooming, healthcare, fabric & home care, and baby, feminine & family care. Through the first half of FY 2019 each segment's portion of revenues was 20%, 9%, 12%, 33% and 26%, respectively. Each segment's contribution to net earnings was 25%, 11%, 14%, 28% and 22%, respectively.

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