Buy Procter & Gamble Co (PG) Turnaround and the Nelson Peltz Factor

Procter & Gamble Co (NYSE:PG) is having troubling times amid problems in turnaround amid changing industry environment and increasing pressure from investors. The stock is down about 10% over the last six months. But we believe that the current drop presents an excellent buying opportunity.

Procter & Gamble Co (NYSE:PG) recently gave more roles to Nelson Peltz, the billionaire investor who got a seat on the company’s board last year after one of the most vicious and expensive proxy battles in the history of any public company. Analysts think that the arrival of Peltz at P&G board will bode well for the company in the future, as the investor will force the management to take the right decisions.

Earlier this month, Procter & Gamble Co (NYSE:PG) said it appointed Peltz to innovation and technology committee of the board. The committee advises the management on growth areas. Peltz has a solid track record of helping companies solve their problems. The owner of Trian Fund Management helped Mondelez International solve its major problems. Mondelez stock jumped 23% since the arrival of the investor to its board.

Trian Fund owns about $3.5 billion worth of P&G shares.

Revenue of Procter & Gamble Co (NYSE:PG) is dwindling. However, it’s important to note that the company’s non-GAAP earnings, which show the most original picture of the company’s current financial strength, are recovering.

Procter & Gamble Co (NYSE:PG) beat analysts’ estimates for the fiscal second quarter of 2018. The company maintained its revenue guidance for the year but increased estimates core earnings per share growth for fiscal 2018 to a range of 5% to 8%, better than the prior guidance of 5% to 7%. Procter & Gamble Co (NYSE:PG) CEO David Taylor’s turnaround plan is working. In the second quarter, the company’s beauty business revenue increased by a whopping 9%, a record. Revenue in the health care division jumped 9%.

According to CNBC, 12 analysts recommend investors to “Hold” Procter & Gamble Co (NYSE:PG) stock, while 5 analysts have a “Strong Buy” rating. No analysts recommend investors to sell the stock. The average price target for P&G stock is $93, which shows a huge upside when compared with the current trading price.

Last month, Jim Cramer said in a program on CNBC that Procter & Gamble Co (NYSE:PG) is a good stock to buy as the company is trending on a turnaround path. The turnaround plan, according to Cramer, includes understanding new businesses and entering them with competitive pricing and direct-to-consumer channels. Cramer also believes that under the supervision of Nelson Peltz, P&G will go through a “huge” margin improvement.