Procter & Gamble: Premium Valuations Justified?

Procter & Gamble (P&G) Hygiene & Health Care Ltd. seems to have a higher return potential over its fast moving consumer goods (FMCG) peers. The stock is poised for a further upside despite being the most expensive bet in the personal care segment. Its price to earnings (P/E) ratio over the previous 12 months was at 53.32 times.

P&G’s return potential -- difference between the current trading price and target price -- estimated by analysts polled by Bloomberg is the highest at 15.15 percent among its peers. Colgate Palmolive Ltd. comes closest at 9.56 percent, while others are far lower.

What Is P&G’s Distinct Advantage...

Brokerage house Motital Oswal Ltd. has come out with a report saying the FMCG major's longer-term earnings prospects are far superior to its peers as the company enjoys far superior barriers to entry in its key feminine hygiene segment, which contributes 69 percent to its sales. Its advantages include distribution reach, category focus and development efforts, and parent support, among other things.