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Procter & Gamble Co. (PG)

Price to FCFE (P/FCFE)

Difficulty: Intermediate

Free Cash Flow to Equity (FCFE)

Procter & Gamble Co., FCFE calculation

US$ in millions

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12 months ended Jun 30, 2019 Jun 30, 2018 Jun 30, 2017 Jun 30, 2016 Jun 30, 2015 Jun 30, 2014
Net earnings attributable to Procter & Gamble 3,897  9,750  15,326  10,508  7,036  11,643 
Net earnings attributable to noncontrolling interests 69  111  85  96  108  142 
Net noncash charges 10,908  1,986  (2,215) 3,191  6,850  3,634 
Change in operating assets and liabilities 368  3,020  (443) 1,640  614  (1,461)
Operating activities 15,242  14,867  12,753  15,435  14,608  13,958 
Capital expenditures (3,347) (3,717) (3,384) (3,314) (3,736) (3,848)
Proceeds from asset sales 394  269  571  432  4,497  570 
Change in short-term debt (2,215) (3,437) 2,727  (418) (2,580) 3,304 
Additions to long-term debt 2,367  5,072  3,603  3,916  2,138  4,334 
Reductions of long-term debt (969) (2,873) (4,931) (2,213) (3,512) (4,095)
Free cash flow to equity (FCFE) 11,472  10,181  11,339  13,838  11,415  14,223 

Based on: 10-K (filing date: 2019-08-06), 10-K (filing date: 2018-08-07), 10-K (filing date: 2017-08-07), 10-K (filing date: 2016-08-09), 10-K (filing date: 2015-08-07), 10-K (filing date: 2014-08-08).

Item Description The company
FCFE Free cash flow to equity is the cash flow available to Procter & Gamble Co.’s equity holders after all operating expenses, interest, and principal payments have been paid and necessary investments in working and fixed capital have been made. Procter & Gamble Co.’s FCFE declined from 2017 to 2018 but then increased from 2018 to 2019 exceeding 2017 level.

Price to FCFE Ratio, Current

Procter & Gamble Co., current P/FCFE calculation, comparison to benchmarks

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No. shares of common stock outstanding 2,493,812,048
Selected Financial Data (US$)
Free cash flow to equity (FCFE) (in millions) 11,472 
FCFE per share 4.60
Current share price (P) 122.18
Valuation Ratio
P/FCFE 26.56
Benchmarks
P/FCFE, Industry
Consumer Goods 17.41

Based on: 10-K (filing date: 2019-08-06).

If the company P/FCFE is lower then the P/FCFE of benchmark then company is relatively undervalued.
Otherwise, if the company P/FCFE is higher then the P/FCFE of benchmark then company is relatively overvalued.

Price to FCFE Ratio, Historical

Procter & Gamble Co., historical P/FCFE calculation, comparison to benchmarks

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Jun 30, 2019 Jun 30, 2018 Jun 30, 2017 Jun 30, 2016 Jun 30, 2015 Jun 30, 2014
No. shares of common stock outstanding1 2,502,259,668 2,488,011,390 2,550,014,230 2,668,751,125 2,712,561,733 2,707,652,337
Selected Financial Data (US$)
Free cash flow to equity (FCFE) (in millions)2 11,472  10,181  11,339  13,838  11,415  14,223 
FCFE per share3 4.58 4.09 4.45 5.19 4.21 5.25
Share price1, 4 114.28 82.64 91.44 85.99 75.48 80.95
Valuation Ratio
P/FCFE5 24.93 20.20 20.56 16.58 17.94 15.41
Benchmarks
P/FCFE, Industry
Consumer Goods — 14.90 15.53 13.30 13.27 13.58

Based on: 10-K (filing date: 2019-08-06), 10-K (filing date: 2018-08-07), 10-K (filing date: 2017-08-07), 10-K (filing date: 2016-08-09), 10-K (filing date: 2015-08-07), 10-K (filing date: 2014-08-08).

1 Data adjusted for splits and stock dividends.

2 See details »

3 2019 Calculation
FCFE per share = FCFE ÷ No. shares of common stock outstanding
= 11,472,000,000 ÷ 2,502,259,668 = 4.58

4 Closing price as at the filing date of Procter & Gamble Co.’s Annual Report.

5 2019 Calculation
P/FCFE = Share price ÷ FCFE per share
= 114.28 ÷ 4.58 = 24.93

Valuation ratio Description The company
P/FCFE Price to free cash flow to equity is cash valuation indicator of stockholders’ equity. Procter & Gamble Co.’s P/FCFE ratio declined from 2017 to 2018 but then increased from 2018 to 2019 exceeding 2017 level.