Among DJIA Stocks Procter & Gamble had a Stellar Quarter, Yet its Stock Underperformed others on the DJIA

    As of July 2, 2020 the median year-over-year (YoY) EPS growth (March, 2020 Quarter) for a stock in the Dow Jones Industrial Average (DJIA) was a negative 3.39%. But the median gain for a stock on the DJIA from its 52-week low was 43%.

Exhibit: Procter & Gamble Brands

(Source: P&G Website)

    Procter & Gamble (PG) a member of the DJIA had a stellar March quarter. Its EPS grew by 10.3% YoY. This put Procter & Gamble's performance in the fourth quartile. Yet, its gain from 52-week low was just 28% as of July 2, 2020 putting it in the first quartile of gains. Why is there such a disparity in stock performance for a proven stellar company?

  

Exhibit: Dow Jone Industrial Average (DJIA) March, 2020 Quarter EPS Growth & Gains from 52-Week Low

(Source: SECURFII.COM - Data as of July 3, 2020)

    In this era of extreme uncertainty in the economy due to the pandemic, Procter & Gamble is one of the very few companies still providing annual earnings guidance. They are also a rare company that is still maintaining and increasing their dividends and continuing their share repurchase. I am not a fan of share repurchases since it seems to mostly benefit a company's management to achieve its EPS goals rather than being a true return of money to the shareholders. But, if share repurchases are done at the right (lower) price compared to the fair market valuation of the company, it could be a huge boost to the shareholders. 

    The company is expecting to pay over $7.5 billion in dividends and repurchase $7 billion to $8 billion in shares in fiscal 2020. Over the three quarters in fiscal 2020, Procter & Gamble has seen organic sales growth averaging about 6% when the GDP growth for the world has turned negative the first-half of 2020.

    The company is richly valued at about 24x earnings. That may be the reason why its stock gains are not in par with the rest of the stocks in the DJIA. But some of the companies, like Boeing, have had a disastrous fall in sales. Boeing will continue to hurt for multiple quarters or even years to come as airline traffic recovers slowly. If there's a pull back in the stock, Procter & Gamble would a great addition to a portfolio.   

Disclosure: At the time of this publication, I do not own PG stock.