Procter & Gamble reported better than expected Q3 results. Should I invest in May?

Written by: Stanko Iliev
April 21, 2021
  • Procter & Gamble reported better than expected Q3 results
  • Citigroup lowered its rating on P&G to neutral
  • $120 represents a strong support level

Procter & Gamble (NYSE: PG) shares have advanced more than 7% in the last thirty days, and the current price stands around $137. Procter & Gamble reported better than expected Q3 results this Tuesday, and according to the technical analysis, shares of this company remain in a buy zone.

Fundamental analysis: Citigroup lowered its rating on P&G to neutral

Procter & Gamble reported Q3 2021 results this week; total revenue has increased by 5.2% Y/Y to $18.11B while Q3 GAAP EPS was $1.26 (beats by $0.07). Total revenue has increased above the expectations (+$150M), and the company remains focused on the strategies that could deliver balanced growth over the long term.

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“Procter & Gamble delivered another quarter of solid top-line, bottom-line, and cash results in what continues to be a challenging operating environment. We remain focused on executing our strategies of superiority, productivity, constructive disruption, and improving P&G’s organization and culture,” said David Taylor, Chairman, President, and Chief Executive Officer.

Procter & Gamble has proven its stability during the Covid-19 pandemic, and the third-quarter earnings results showed that this company is moving in the right direction.

Procter & Gamble has an excellent position in the market, but the current share price does not provide an attractive entry point for long-term investors, in my opinion. Procter & Gamble’s future cash flows have already been priced into the valuation of its shares, and with a $337B market capitalization, this company remains expensive.

The book value per share is less than $20, and there are certainly better long-term investment opportunities at the moment. It is also important to mention that Citigroup lowered its rating on P&G to neutral this week on concerns that earnings over the next couple of quarters could be under pressure.

At the current valuation, much of the upside has already been included in the stock price, and maybe it is not the best moment to invest in Procter & Gamble shares.

Technical analysis: Procter & Gamble  shares continue to trade in a bull market

There are some apparent risks when it comes to investing in Procter & Gamble shares in May, but as long as the price is above $120, this stock remains in a “buy “zone.

Data source: tradingview.com

The critical support levels are $130 and $120, $140, $150, and $160 represent the resistance levels. If the price jumps above $140 resistance, it would be a signal to trade shares, and the next target could be around $145 or even $150.

On the other side, if the price falls below $120, it would be a firm “sell” signal and probably a trend reversal sign.

Summary

Procter & Gamble reported better than expected Q3 results this week, but Citigroup lowered its rating on P&G on concerns that earnings over the next couple of quarters could be under pressure. With a $337B market capitalization, this stock is expensive, in my opinion; still, as long the price is above $120 support, there is no risk of the bear market.