Procter & Gamble (
) is the largest consumer goods company in the world. P&G
manufactures consumer goods across a variety of segments and sells
its products in over 180 countries across the globe. Around 41% of
P&G's sales come from North America, while Western Europe
generates 21% and developing markets account for over 32%. P&G
maintains an envious portfolio of billion-dollar brands like Tide,
Ariel, Gillette, Pantene, Olay and Oral-B, and competes with
) and Colgate-Palmolive (
Given the wide variety of product segments and markets in which
P&G operates, we decided to examine each segment's individual
contribution to total company value. We estimate Procter &
Gamble's stock value at
, roughly a 25% premium to market price. Our product segment
analysis below is based on our proprietary estimate of P&G's
Among P&G's diverse range of products, the segments that can
be expected to drive the company's value going forward are likely
those that either (i) constitute a higher proportion of P&G's
current revenues, and/or (ii) have a high expected growth rate.
P&G's overall revenue growth in each segments is a function of
both the overall market size and P&G's expected market share
The following chart summarizes our estimates of P&G's
business over the next five years (2011-16).
Percentages in parenthesis represent each product segment's
contribution to P&G's current revenues. The horizontal bars
illustrate our estimates for compound annual growth rate (CAGR)
of 2011-16 revenues, split between growth in market size (in
blue) and growth due to P&G's market share gains (in red)
across each product segment.
The laundry segment leads the charge for P&G, representing
17% contribution to total revenues, but features relatively low
expected market size growth (at 3.1% year-over-year). With its
portfolio of detergents like Ariel and Tide (and the launch of its
variant targeting consumers in emerging markets like India),
P&G is well-equipped to gain share and increase revenues at an
estimated incremental 0.5% CAGR over pure market growth.
Fragrances and deodorants currently constitute 11% of P&G's
revenues and we anticipate a 4.5% CAGR for revenues from this
segment from pure market growth. We project similar market growth
from the baby care segment, which contributes 10% of P&G's
Male grooming products, under the Gillette brand, currently
generate 9% of P&G's total revenues. We estimate that the male
grooming market will grow at a 5.8% CAGR while market share gains
could add another 1.7% to annual revenue growth.
While facial skin care contributes only 3% to P&G's current
revenues, this segment exhibits the highest market-wide growth
potential due to the expanding popularity of anti-aging skin care.
Further, P&G's Olay brand of skin cremes could trigger
additional market share gains, prompting our estimate for 7.1% CAGR
of revenues from this segment.
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See our full analysis for Procter & Gamble's stock