Pricey valuation pull down P&G Hygiene stock despite strong Q4 results

A resilient portfolio and margin gains though can help earnings grow at 18-20 per cent annually over next two years

Procter & Gamble Hygiene & Health Care’s (P&G Hygiene) June 2020 quarter (Q4) results surprised the Street with strong profits, despite Covid-led disruptions. Yet, the stock has shed 1.2 per cent since the result was announced on Tuesday last week. A key reason for this is the stock’s pricey valuation.

The maker of popular consumer product brands Whisper (a sanitary hygiene product) and Vicks (for cold and cough) follows the July-June accounting year.

The stock’s 1-year forward price-to-earnings (P/E) ratio is around 60x, which is at a 7 per cent premium to its long-term mean. It is also higher than the 56x