The Procter & Gamble Company (PG), Colgate-Palmolive Company (CL): Old CEO, New Prospects

The table below shows a comparison between P&G, Johnson & Johnson and the industry.

Even though J&J’s stock performance has been impressive, P&G is better valued than Johnson & Johnson. Johnson & Johnson is currently trading at a higher P/E and P/S multiple as compared to P&G’s stock. Because P&G has both P/E and P/S multiples well below the industry standards, a value investor would surely be attracted to P&G. A growth investor looking to add high-earning companies to his portfolio would also consider the stock given its high EPS of $4.46.

P&G overhaul

There have been reports surrounding P&G of a new company structure wherein the company would divide itself into four sectors. Each unit would have its own president, who would then report to A.G. Lafley. P&G also laid out plans to improve its performance in developed markets, while maintaining its momentum in developing markets. Moreover, the company plans to generate an additional $10 billion by 2016 through its cost-reduction and productivity improvement plans.

Foolish bottom line

The consumer-goods stocks act as an inflation hedge and also provide great diversification benefits to the portfolio. P&G is better valued than both Colgate-Palmolive and Johnson & Johnson. Considering the changes that P&G is looking forward to, I am bullish on its stock. With the old CEO back in action, it surely is a good buy!

The article Old CEO, New Prospects originally appeared on Fool.com.

usha patodia has no position in any stocks mentioned. The Motley Fool recommends Johnson & Johnson and Procter & Gamble. The Motley Fool owns shares of Johnson & Johnson. usha is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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