Will the latest Procter Gamble volatility surge frighten shareholders?


USD 151.85  0.54  0.36%   

It looks as if Procter Gamble may not have a good chance to recover from the latest dip as its shares fell again. The firm current daily volatility is 1.38 percent, with a beta of 0.51 and an alpha of -0.12 over DOW. As many millenniums are trying to avoid the latest volatility, we are going to digest Procter Gamble a little further to understand its historical price patterns. We will look into some reasons why it is still possible for Procter Gamble to maintain above-average margins while minimizing volatility.
Published over two months ago
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The company is active under Consumer Defensive sector as part of Household & Personal Products industry. Procter Gamble reports 31.49 B of total liabilities with total debt to equity ratio (D/E) of 0.67, which is normal for its line of buisiness. The entity has a current ratio of 0.64, implying that it has not enough working capital to pay out debt commitments in time. Debt can assist Procter Gamble until it has trouble settling it off, either with new capital or with free cash flow. So, Procter Gamble's shareholders could walk away with nothing if the company can't fulfill its legal obligations to repay debt. However, a more frequent occurrence is when companies like Procter Gamble sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Procter to invest in growth at high rates of return. When we think about Procter Gamble's use of debt, we should always consider it together with cash and equity.
Investing in Procter Gamble, just like investing in any other equity instrument, is characterized by a strong risk-return correlation. High risks mean high returns and low risk means lower expected returns. Risk management is the act of identifying and assessing the potential risk and developing strategies to minimize these risks and earn maximum possible profits while holding Procter Gamble along with other instruments in the same portfolio. Using conventional technical analysis and fundamental analysis to select individual securities into a portfolio complements risk management and adds value to overall investors' investing strategies.
Sophisticated investors, who have witnessed many market ups and downs, frequently view the market will even out over time. This tendency of Procter Gamble's price to converge to an average value over time is called mean reversion. However, historically, high market prices usually discourage investors that believe in mean reversion to invest, while low prices are viewed as an opportunity to buy. Please use the tools below to analyze the current value of Procter Gamble in the context of predictive analytics.
Please note, it is not enough to conduct a financial or market analysis of a single entity such as Procter Gamble. Your research has to be compared to or analyzed against Procter Gamble's peers to derive any actionable benefits. When done correctly, Procter Gamble's competitive analysis will give you plenty of quantitative and qualitative data to validate your investment decisions or develop an entirely new strategy towards taking a position in Procter Gamble.

How important is Procter Gamble's Liquidity

Procter Gamble financial leverage refers to using borrowed capital as a funding source to finance Procter Gamble ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Procter Gamble financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Please check the breakdown between Procter Gamble's total debt and its cash.

What do experts say?

Stock analysis is a method for investors and traders to make buying and selling decisions. By studying and evaluating past and current data, investors and traders attempt to gain an edge in the markets by making informed decisions.
It is good to see analyst projects for Procter Gamble, but it might be worth checking our own buy vs. sell analysis

Procter Gamble Correlation with Peers

Investors in Procter can reduce exposure to individual asset risk by holding a diversified portfolio of assets in addition to a long position in Procter Gamble. Diversification will allow for the same portfolio return with reduced risk. The correlation table of Procter Gamble and its peers is a two-dimensional matrix that shows the correlation coefficient between pairs of securities Procter is related in some way. The cells in the table are color-coded to highlight significantly positive and negative relationships. Each cell shows the correlation between one pair of equities and can be used to run pair trading strategies or create efficient portfolios with your current brokerage.
Please check volatility of Procter for more details

What is driving Procter Gamble Investor Appetite?

Procter Gamble maintains Sharpe Ratio (i.e., Efficiency) of -0.15, which implies the firm had -0.15% of return per unit of risk over the last 3 months. Macroaxis standpoint towards forecasting the risk of any stock is to look at both systematic and unsystematic factors of the business, including all available market data and technical indicators. Procter Gamble exposes twenty-seven different technical indicators, which can help you to evaluate volatility that cannot be diversified away. Please be advised to check Procter Gamble coefficient of variation of (808.52), and Risk Adjusted Performance of (0.14) to confirm the risk estimate we provide.

Our Procter analysis indicates possible reversion in November

The potential upside is down to 1.61 as of today. Procter Gamble exhibits very low volatility with skewness of -1.24 and kurtosis of 4.47. However, we advise investors to further study Procter Gamble technical indicators to ensure that all market info is available and is reliable. Understanding different market volatility trends often help investors to time the market. Properly using volatility indicators enable traders to measure Procter Gamble's stock risk against market volatility during both bullish and bearish trends. The higher level of volatility that comes with bear markets can directly impact Procter Gamble's stock price while adding stress to investors as they watch their shares' value plummet. This usually forces investors to rebalance their portfolios by buying different stocks as prices fall.

The Bottom Line

Although some firms in the household & personal products industry are either recovering or due for a correction, Procter may not be as strong as the others in terms of longer-term growth potentials. The bottom line, as of the 1st of October 2022, our final 90 days buy-sell recommendation on the firm is Strong Hold. We believe Procter Gamble is currently undervalued with low probability of financial unrest for the next two years.

Editorial Staff

This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Vlad Skutelnik do not own shares of Procter Gamble. Please refer to our Terms of Use for any information regarding our disclosure principles.

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