In this article I am going to analyze Procter & Gamble Co. company, which its ticker is (PG) based in its earning per share and its (P/E) ratio to see how much its stock will worth in the 2027.
First, let see how does PG’s EPS did in the past six year starting form 2017 in order to estimate its growth rate, as shown below:
As we can see from the above chart that PG maintain an uptrend EPS, which started from 3.74$ EPS in 2017, until it reached 5.77$ in 2022, with drop in 2019 where the EPS was 1.57, but since the EPS get back to the track in the following year I will ignore this records, that means PG’s EPS was increasing for the last five years with growth rate of 9.06%.
Now that we have the growth rate of PG EPS in the last five years, we are going to use this growth rate to estimate what will its EPS be in 2027 ,which is five years from now by applying the following formula:
FV=PV(1+i)n
- Where
- PV = PG EPS in year 2022 = 5.77$
- i = growth rate of PG EPS estimated above = 9.06%
- n = years of investment = 5 years in 2027
By substitute the numbers estimated early in the above formula, I end up with PG’s EPS in year 2027 equal to 8.9$.
Now, I have to see what was (P/E) ratio that PG did have in the last six years, which as shown below:
Now we can estimate two scenarios for PG’s stock price which is Bull market and the bear market.
For Bull market , I am going to take the highest (P/E) ratio which was 73.11 in year 2019, to see what will be the price of PG stock in 2027:
Bull market PG Stock’s price in 2027= (73.11)*(8.9$) = 650.7$.
For Bear market, I will take the lowest (P/E) ratio which was 13.84 in year 2017, to see what will be the price of PG stock in 2027.
Bear market PG Stock’s price in 2027= (13.84)*(8.9$) = 123.2$.
As of writing this article, PG’s stock price is 151.57 $ which is higher than the bear market scenario and below the Bull market scenario. Therefore, investing 10,000$ in PG stock, might be in 2027 (either 8,128.3$ or 42,930.7$), which means investing in PG stock for the five next year might increase your capital with 329%, or make you lose 18.7% of it. I believe it is not worth investing unless investor are willing to afford the lost and tolerate risk.
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