Will Procter & Gamble (PG) Keep Growing in 2013? – Colgate-Palmolive Company (CL), Unilever N.V. (ADR) (UN)

If you were contemplating whether this company is able to make these payments, then keep in mind that in 2012 P&G was more than capable to pay its dividend from its free cash flow. Moreover, the company bought back nearly $2 billion worth of its own shares using its free cash flow. This move was another way to save on its expenses: the company is paying a 3% yield and pays much less for its debt. Finally, the company kept augmenting its cash and left its debt to equity ratio unchanged at 0.5 as of the end of 2012. This means, the company’s financial riskdidn’t rise despite the high dividend payments and stock repurchase program. So even if the company will keep on this course, it isn’t likely to raise its risk.

So even though The Procter & Gamble Company (NYSE:PG) doesn’t offer a much higher dividend yield compared other consumer product companies, it still pays more out of its earnings. In other words, the company is giving back a larger portion of its profits than other companies do. But will P&G augment its earnings in 2013?

Outlook for 2013

The company has recently revised down its projected earnings per share in 2013 to $3.94-$4.04, which puts the mean at $3.99 per share. This will represent a 9% rise compared to 2012 in earnings per share. If the company will reach such a high EPS in 2013, it will lower thecompany’s payout; this payout, however, is likely to remain high compared other consumer product companies. But will The Procter & Gamble Company (NYSE:PG) reach its target? If the company won’t raise its volume sold and will rely solely on price gains, this could lower the chances of reaching the target. Finally, the developments in the currencies markets might raise the risks in P&G revenues growth.

Proctor & Gamble seems to be on its way of having a better year in 2013 than it had in 2012. The company has some strong points including its financial stability, strong cash flow and reasonable dividend payment. But the burden of proof still falls on P&G.

The article Will Procter & Gamble (NYSE:PG) Keep Growing in 2013? originally appeared on Fool.com and is written by Lior Cohen.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.