Procter & Gamble: Stable Growth Or Risky Gamble?

Procter & Gamble is divesting the Iams, Eukanuba, & Natura pet food brands. The brands are being sold to Mars Incorporated for $2.9 billion in cash. The proceeds will go to general corporate expenses. Procter & Gamble's share of the pet care industry is around 5%. They are divesting their pet care brands due to a general weakness in the category. In 2013, Pet Care product volume was down in the mid single digits. I would like to see this money returned to shareholders in the form of additional share repurchases rather than go to 'general corporate expenses.'

Procter & Gamble appears to be slightly overvalued at this time. The company's consumer product brands have provided stable cash flows. Procter & Gamble is a shareholder friendly company that has rewarded shareholders with a rising dividend and share repurchases. Procter & Gamble is a slow growing company with strong cash flows suitable for defensive investors.

Source: Seeking Alpha

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