Procter & Gamble Effectively Weathers Headwinds in Q2, but Shares Look Overheated

While we believe Procter & Gamble’s second-quarter results (5% organic sales growth and modest degradation in gross and operating margins) suggest it's withstanding macro and competitive challenges quite well, we are less sanguine on shares at current levels. With six months in the rearview, we see little to warrant altering our near- or long-term outlooks for the business, but our $125 fair value estimate should see a low-single-digit bump on time value. Shares trade at a 15%-20% premium to our intrinsic valuation, but if a more attractive entry point comes to fruition (likely on economic concerns), we’d be eager buyers.