Ackman's Actions May Cause P&G (PG) to Divest Some Key Assets
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Price: $161.50 +0.60%
Overall Analyst Rating:
NEUTRAL (
Up)
Dividend Yield: 2.6%
EPS Growth %: +10.9%
Overall Analyst Rating:
NEUTRAL (
Up)Dividend Yield: 2.6%
EPS Growth %: +10.9%
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Following the recent pop in Procter & Gamble Co. (NYSE: PG) stock, many wonder if there is anything left for the consumer staple-making giant.
There is, here's how.
Last week, activist investor and hedge fund man Bill Ackman, of Pershing Square, was said to have taken the "largest initial investment ever" in the company, leading to an immediate 4.4 percent jump in the stock price. However, shares are up just 5.4 percent from when news hit the wires on July 11th, bringing the stock to highs not seen since...April?
Now, P&G might have hired advisors in a plan to divest certain non-core assets and streamline the company for greater success.
According to one analyst, P&G's share price could move into the mid-$80s in selling brands like Crest, Iams, and Braun. That's a substantial premium to the $64 - $65 range P&G is currently trading in. Over the last five years, investors have suffered through a 2.6 percent gain in the stock, sorely missing broader market movements.
Recently, P&G had to trim growth expectations three times in 2012 due to slowing growth in Europe and the U.S., facing rising commodity costs, unfavorable foreign exchange, and a tough pricing environment.
Ackman's move couldn't come at a better time; Bloomberg today reports that some directors are dissatisfied with CEO Robert McDonald's performance as of late. No word on future direction for P&G's leadership, but investors should keep an eye out for any moves over the next several weeks.
One Bernstein analyst sees P&G worth from $180 million to $200 billion on a sum-of-parts valuation. Though that's only up 13 percent from P&G's current market cap, the trimmed operations would add better cost and operational synergies to the company.
Another analyst thinks that part of P&G's negotiating power comes from its being a conglomerate with a vast array of products.
But, P&G shouldn't rule a move like this out; peer Kraft Foods (NYSE: KFT) has seen shares rise 15 percent since announcing it would split its snacks and grocery businesses.
P&G shares are indicated higher Tuesday.
There is, here's how.
Last week, activist investor and hedge fund man Bill Ackman, of Pershing Square, was said to have taken the "largest initial investment ever" in the company, leading to an immediate 4.4 percent jump in the stock price. However, shares are up just 5.4 percent from when news hit the wires on July 11th, bringing the stock to highs not seen since...April?
Now, P&G might have hired advisors in a plan to divest certain non-core assets and streamline the company for greater success.
According to one analyst, P&G's share price could move into the mid-$80s in selling brands like Crest, Iams, and Braun. That's a substantial premium to the $64 - $65 range P&G is currently trading in. Over the last five years, investors have suffered through a 2.6 percent gain in the stock, sorely missing broader market movements.
Recently, P&G had to trim growth expectations three times in 2012 due to slowing growth in Europe and the U.S., facing rising commodity costs, unfavorable foreign exchange, and a tough pricing environment.
Ackman's move couldn't come at a better time; Bloomberg today reports that some directors are dissatisfied with CEO Robert McDonald's performance as of late. No word on future direction for P&G's leadership, but investors should keep an eye out for any moves over the next several weeks.
One Bernstein analyst sees P&G worth from $180 million to $200 billion on a sum-of-parts valuation. Though that's only up 13 percent from P&G's current market cap, the trimmed operations would add better cost and operational synergies to the company.
Another analyst thinks that part of P&G's negotiating power comes from its being a conglomerate with a vast array of products.
But, P&G shouldn't rule a move like this out; peer Kraft Foods (NYSE: KFT) has seen shares rise 15 percent since announcing it would split its snacks and grocery businesses.
P&G shares are indicated higher Tuesday.
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