The Procter & Gamble Company (PG) Discounted Future Market Cap

The Procter & Gamble Company

PG (NYSE)

(%)

Valuation
The Procter & Gamble Company Discounted Future Market Cap

"""
    Model: Discounted Future Market Cap

# Render model description
model.render_description(r"""
## Discounted Future Market Cap

This model estimates the intrinsic value of a common share by projecting the Future Market Capitalization using the estimated PE Ratio and then discounting it to the Present using an Annual Required Rate of Return.
""")

# Initialize assumptions
assumptions.init({
    "data": {
        "%discount_rate": None,
        "beta": data.get("profile:beta", default=1),
        "%risk_free_rate": data.get("treasury:year10"),
        "%market_premium": data.get("risk:totalEquityRiskPremium"),
        "pe_ratio": data.get("ratio:priceEarningsRatio"),
        "%revenue_growth_rate": None,
        "%net_income_margin": None,
        "historical_years": 10,
        "projection_years": 5,
    },
    "hierarchies": [{
        "parent": "%discount_rate",
        "children": ["beta", "%risk_free_rate", "%market_premium"]
    }]
})

# Calculate cost of equity
cost_of_equity = assumptions.get("%risk_free_rate") + assumptions.get("beta") * assumptions.get("%market_premium")
assumptions.set("%discount_rate", cost_of_equity)

# Compute metrics
data.compute({
    "%grossMargin": "income:grossProfit / income:revenue",
    "%operating_margin": "income:operatingIncome / income:revenue",
    "%netMargin": "income:netIncome / income:revenue",
    "%revenueGrowthRate": "function:growth:income:revenue",
    "%netIncomeGrowthRate": "function:growth:income:netIncome",
    "%totalStockholdersEquityGrowthRate": "function:growth:balance:totalStockholdersEquity",

# Calculating NOPAT (Net Operating Profit After Taxes)
    "%taxRate": "income:incomeTaxExpense / income:incomeBeforeTax",
    "incomeTax": "income:operatingIncome * %taxRate",
    "nopat": "income:operatingIncome - incomeTax",

# Calculating Invested Capital
    "investedCapital": [
        "balance:totalNonCurrentAssets", "-", "balance:cashAndCashEquivalents", "+",
        "balance:totalCurrentAssets", "-", "balance:totalCurrentLiabilities"
    ],
    "%roic": "nopat / investedCapital",
})

data.set_default_range(f"{-assumptions.get('historical_years')}->0")

assumptions.set("%net_income_margin", data.average(f"%netMargin"))
assumptions.set_bounds(
    "%net_income_margin", low=0, high="100%"
)

assumptions.set("%revenue_growth_rate", data.average(f"%revenueGrowthRate"))
assumptions.set_bounds(
    "%revenue_growth_rate", low=0, high="25%"
)

# Compute forecasted values and ratios
data.compute({
    "income:revenue": f"""
        income:revenue:-1 * 
        (1 + {assumptions.get('%revenue_growth_rate')})
    """,
    "%revenueGrowthRate": "function:growth:income:revenue",
    "income:netIncome": f"income:revenue * {assumptions.get('%net_income_margin')}",
}, forecast=assumptions.get("projection_years"))

projected_revenue = data.get("income:revenue")
projected_net_income = data.get(f"income:netIncome:{assumptions.get('projection_years')}")

shares_outstanding = data.get("income:weightedAverageShsOut")
future_market_cap = assumptions.get("pe_ratio") * projected_net_income
discounted_future_market_cap = future_market_cap / (
            (1 + assumptions.get("%discount_rate")) ** assumptions.get("projection_years"))

stock_value = discounted_future_market_cap / shares_outstanding

# Set the final value
model.set_final_value({
    "value": stock_value,
    "units": "$"
})

# Render results
model.render_results([
    [stock_value, "Present Value", "$"],
    [projected_net_income, "Estimated net income", "$"],
    [future_market_cap, "Estimated market capitalization", "$"],
    [discounted_future_market_cap, "Market capitalization discounted to present", "$"],
    [shares_outstanding, "Shares Outstanding", "#"],
    [data.get("income:eps"), "Earnings Per Share (EPS)", "$"],
    [data.get("profile:price"), "Market Price", "$"],
    [data.get("ratio:priceEarningsRatio"), "Price to Earnings (PE) Ratio", "#"]
])

# Render chart
model.render_chart({
    "data": {
        "income:revenue": "Revenue",
        "income:netIncome": "Net Income"
    },
    "start": -assumptions.get("historical_years"),
    "end": "*",
    "properties": {
        "title": "Historical and forecasted data",
        "set_editable": [
            "income:revenue",
            "income:netIncome"
        ]
    }
})

# Render table for estimated future values
model.render_table({
    "data": {
        "income:revenue": "Revenue",
        "%revenueGrowthRate": "Revenue Growth Rate",
        "income:netIncome": "Net Income",
    },
    "start": -1,
    "end": "*",
    "properties": {
        "title": "Estimated Future Values",
        "order": "ascending",
        "number_format": "M"
    }
})

# Render historical values table
model.render_table({
    "data": {
        "income:revenue": "Revenue",
        "income:costOfRevenue": "Cost of Revenue",
        "income:grossProfit": "Gross Profit",
        "%grossMargin": "Gross Margin",
        "income:operatingIncome": "Operating Income",
        "%operating_margin": "Operating Margin",
        "income:netIncome": "Net Income",
        "%netMargin": "Net Margin",
    },
    "start": -assumptions.get("historical_years"),
    "end": 0,
    "properties": {
        "title": "Historical Values",
        "display_averages": True,
        "order": "descending",
        "number_format": "M"
    },
})

# Render historical growth rates table
model.render_table({
    "data": {
        "income:revenue": "Revenue",
        "%revenueGrowthRate": "Revenue Growth Rate",
        "income:netIncome": "Net Income",
        "%netMargin": "Net Margin",
        "%netIncomeGrowthRate": "Net Income Growth Rate",
        "balance:totalStockholdersEquity": "Stockholders Equity",
        "%totalStockholdersEquityGrowthRate": "Equity Growth Rate",
        "%roic": "Return on Invested Capital (ROIC)",
        "nopat": "After-tax Operating Income",
        "%taxRate": "Income Tax Rate",
        "investedCapital": "Invested Capital",
    },
    "start": -assumptions.get("historical_years"),
    "end": 0,
    "properties": {
        "title": "Historical Growth Rates",
        "display_averages": True,
        "order": "descending",
        "number_format": "M"
    },
})

# Set description for assumptions
assumptions.set_description({
    "%discount_rate": r"""
        ## Discount Rate

`Discount Rate` = `Cost of Equity` = `Risk Free Rate` + `Beta` * `Market Premium`

The cost of equity is the theoretical rate of return that an equity investment should generate. It is calculated using the CAPM formula.

[Read More](https://www.investopedia.com/terms/c/costofequity.asp#mntl-sc-block_1-0-20)
    """,

"beta": r"""
        ## Beta

Beta is a value that measures the price fluctuations (volatility) of a stock with respect to fluctuations in the overall stock market.
    """,

"%risk_free_rate": r"""
        ## Risk-Free Rate

The risk-free rate represents the interest an investor would expect from an absolutely risk-free investment over a specified period of time.
        By default, it is equal to the current yield of the U.S. 10 Year Treasury Bond.
    """,

"%market_premium": r"""
        ## Market Premium

Market risk premium represents the excess returns over the risk-free rate that investors expect for taking on the incremental risks connected to the equities market.
    """,

"pe_ratio": r"""
        ## Price to Earnings (PE) Ratio

Estimated Price to Earnings (PE) Ratio at the end of the projection period.

`Future Market Cap` = `PE Ratio` * `Projected Net Income`
    """,

"%revenue_growth_rate": r"""
        ## Revenue Growth Rate

The annual revenue growth rate is applied to projected revenue starting from the second projection year onward.
    """,

"%net_income_margin": r"""
        ## Net Income Margin

Net Income expressed as a percentage of Revenue.
    """,

"historical_years": r"""
        ## Historical Years

The number of historical years used to calculate averages for historical data.
    """,

"projection_years": r"""
        ## Projection Years

The number of years for projecting the analysis into the future.
    """,
})

print("End of model.")

Estimated Value

USD

Market Price USD

* Values are not guaranteed, please do your own
research before making investment decisions.

Discounted Future Market Cap

Interactive Assumptions

Discount Rate Discount Rate `Discount Rate` = `Cost of Equity` = `Risk Free Rate` + `Beta` * `Market Premium` The cost of equity is the theoretical rate of return that an equity investment should generate. It is calculated using the CAPM formula. Read More	%
↳ Beta Beta Beta is a value that measures the price fluctuations (volatility) of a stock with respect to fluctuations in the overall stock market.	#
↳ Risk Free Rate Risk-Free Rate The risk-free rate represents the interest an investor would expect from an absolutely risk-free investment over a specified period of time. By default, it is equal to the current yield of the U.S. 10 Year Treasury Bond.	%
↳ Market Premium Market Premium Market risk premium represents the excess returns over the risk-free rate that investors expect for taking on the incremental risks connected to the equities market.	%
Pe Ratio Price to Earnings (PE) Ratio Estimated Price to Earnings (PE) Ratio at the end of the projection period. `Future Market Cap` = `PE Ratio` * `Projected Net Income`	#
Revenue Growth Rate Revenue Growth Rate The annual revenue growth rate is applied to projected revenue starting from the second projection year onward.	%
Net Income Margin Net Income Margin Net Income expressed as a percentage of Revenue.	%
Historical Years Historical Years The number of historical years used to calculate averages for historical data.	#
Projection Years Projection Years The number of years for projecting the analysis into the future.	#

Results
Present Value	121.6 USD
Estimated net income	15.85 Bil. USD
Estimated market capitalization	389.3 Bil. USD
Market capitalization discounted to present	294.8 Bil. USD
Shares Outstanding	2.42 Bil.
Earnings Per Share (EPS)	6.91 USD
Market Price	166.6 USD
Price to Earnings (PE) Ratio	24.56

Historical and forecasted data

Monetary values in USD

{"sectionId": "section-chart-1", "sectionType": "chart", "title": "Historical and forecasted data", "timeseries": "annual", "series": [{"label": "Revenue", "mappingKey": "income:revenue", "data": [{"l": "2016", "x": "2016-06-30", "y": 65299000000}, {"l": "2017", "x": "2017-06-30", "y": 65058000000}, {"l": "2018", "x": "2018-06-30", "y": 66832000000}, {"l": "2019", "x": "2019-06-30", "y": 67684000000}, {"l": "2020", "x": "2020-06-30", "y": 70950000000}, {"l": "2021", "x": "2021-06-30", "y": 76118000000}, {"l": "2022", "x": "2022-06-30", "y": 80187000000}, {"l": "2023", "x": "2023-06-30", "y": 82006000000}, {"l": "2024", "x": "2024-06-30", "y": 84039000000}, {"l": "2025", "x": "2025-06-30", "y": 84284000000}, {"l": "2026", "x": "2026-06-30", "y": 85784255200, "oy": 85784255200, "e": true, "d": 2026, "g": 1.78, "og": 1.78}, {"l": "2027", "x": "2027-06-30", "y": 87311214942, "oy": 87311214942, "e": true, "d": 2027, "g": 1.78, "og": 1.78}, {"l": "2028", "x": "2028-06-30", "y": 88865354568, "oy": 88865354568, "e": true, "d": 2028, "g": 1.78, "og": 1.78}, {"l": "2029", "x": "2029-06-30", "y": 90447157879, "oy": 90447157879, "e": true, "d": 2029, "g": 1.78, "og": 1.78}, {"l": "2030", "x": "2030-06-30", "y": 92057117290, "oy": 92057117290, "e": true, "d": 2030, "g": 1.78, "og": 1.78}], "dataType": ".", "displayAs": "line", "dataTimeseries": "annual", "hidden": false}, {"label": "Net Income", "mappingKey": "income:netIncome", "data": [{"l": "2016", "x": "2016-06-30", "y": 10508000000}, {"l": "2017", "x": "2017-06-30", "y": 15326000000}, {"l": "2018", "x": "2018-06-30", "y": 9750000000}, {"l": "2019", "x": "2019-06-30", "y": 3897000000}, {"l": "2020", "x": "2020-06-30", "y": 13027000000}, {"l": "2021", "x": "2021-06-30", "y": 14306000000}, {"l": "2022", "x": "2022-06-30", "y": 14742000000}, {"l": "2023", "x": "2023-06-30", "y": 14653000000}, {"l": "2024", "x": "2024-06-30", "y": 14879000000}, {"l": "2025", "x": "2025-06-30", "y": 15974000000}, {"l": "2026", "x": "2026-06-30", "y": 14772048745, "oy": 14772048745, "e": true, "d": 2026, "g": -7.52, "og": -7.52}, {"l": "2027", "x": "2027-06-30", "y": 15034991213, "oy": 15034991213, "e": true, "d": 2027, "g": 1.78, "og": 1.78}, {"l": "2028", "x": "2028-06-30", "y": 15302614056, "oy": 15302614056, "e": true, "d": 2028, "g": 1.78, "og": 1.78}, {"l": "2029", "x": "2029-06-30", "y": 15575000586, "oy": 15575000586, "e": true, "d": 2029, "g": 1.78, "og": 1.78}, {"l": "2030", "x": "2030-06-30", "y": 15852235597, "oy": 15852235597, "e": true, "d": 2030, "g": 1.78, "og": 1.78}], "dataType": ".", "displayAs": "line", "dataTimeseries": "annual", "hidden": false}], "editableDates": {"2026-06-30": 41, "2027-06-30": 42, "2028-06-30": 43, "2029-06-30": 44, "2030-06-30": 45}, "properties": {"display_table": true}, "width": "full"}

Edit Chart Values	2026-06-30	2027-06-30	2028-06-30	2029-06-30	2030-06-30

↳ Growth Rate

Estimated Future Values

Monetary values in USD amounts except #	2025 Jun 30	LTM Feb 27	2026 Jun 30	2027 Jun 30	2028 Jun 30	2029 Jun 30	2030 Jun 30
Revenue	84,284	85,259	85,784	87,311	88,865	90,447	92,057
Revenue Growth Rate	0.292%	1.16%	1.78%	1.78%	1.78%	1.78%	1.78%
Net Income	15,974	16,466	14,772	15,035	15,303	15,575	15,852

Monetary values in USD

amounts except #

2025
Jun 30

LTM
Feb 27

2026
Jun 30

2027
Jun 30

2028
Jun 30

2029
Jun 30

2030
Jun 30

Revenue

84,284

85,259

85,784

87,311

88,865

90,447

92,057

Revenue Growth Rate

0.292%

1.16%

1.78%

Net Income

15,974

16,466

14,772

15,035

15,303

15,575

15,852

Historical Values

Monetary values in USD amounts except #	Average	LTM Feb 27	2025 Jun 30	2024 Jun 30	2023 Jun 30	2022 Jun 30	2021 Jun 30	2020 Jun 30	2019 Jun 30	2018 Jun 30	2017 Jun 30	2016 Jun 30
Revenue	75,247	85,259	84,284	84,039	82,006	80,187	76,118	70,950	67,684	66,832	65,058	65,299
Cost of Revenue	37,825	42,046	41,164	40,848	42,760	42,157	37,108	35,250	34,768	34,432	32,638	32,909
Gross Profit	37,421	43,213	43,120	43,191	39,246	38,030	39,010	35,700	32,916	32,400	32,420	32,390
Gross Margin	49.69%	50.68%	51.16%	51.39%	47.86%	47.43%	51.25%	50.32%	48.63%	48.48%	49.83%	49.6%
Operating Income	15,893	20,135	20,451	18,545	18,134	17,813	17,986	15,706	5,487	13,363	13,766	13,441
Operating Margin	20.9%	23.62%	24.26%	22.07%	22.11%	22.21%	23.63%	22.14%	8.11%	19.99%	21.16%	20.58%
Net Income	13,048	16,466	15,974	14,879	14,653	14,742	14,306	13,027	3,897	9,750	15,326	10,508
Net Margin	17.21%	19.31%	18.95%	17.7%	17.87%	18.38%	18.79%	18.36%	5.76%	14.59%	23.56%	16.09%

Historical Growth Rates

Monetary values in USD amounts except #	Average	LTM Feb 27	2025 Jun 30	2024 Jun 30	2023 Jun 30	2022 Jun 30	2021 Jun 30	2020 Jun 30	2019 Jun 30	2018 Jun 30	2017 Jun 30	2016 Jun 30
Revenue	75,247	85,259	84,284	84,039	82,006	80,187	76,118	70,950	67,684	66,832	65,058	65,299
Revenue Growth Rate	1.78%	1.16%	0.292%	2.48%	2.27%	5.35%	7.28%	4.83%	1.27%	2.73%	-0.369%	-7.7%
Net Income	13,048	16,466	15,974	14,879	14,653	14,742	14,306	13,027	3,897	9,750	15,326	10,508
Net Margin	17.21%	19.31%	18.95%	17.7%	17.87%	18.38%	18.79%	18.36%	5.76%	14.59%	23.56%	16.09%
Net Income Growth Rate	23.39%	3.08%	7.36%	1.54%	-0.604%	3.05%	9.82%	234.3%	-60.03%	-36.38%	45.85%	49.35%
Stockholders Equity	50,354	53,317	52,012	50,286	46,777	46,589	46,378	46,521	47,194	52,293	55,184	57,341
Equity Growth Rate	-1.3%	2.51%	3.43%	7.5%	0.404%	0.455%	-0.307%	-1.43%	-9.75%	-5.24%	-3.76%	-8.13%
Return on Invested Capital (ROIC)	15.85%	20.22%	20.46%	18.67%	18.95%	19.04%	19.31%	18.17%	4.44%	11.3%	12.51%	11.29%
After-tax Operating Income	12,565	16,129	16,291	14,802	14,562	14,643	14,654	12,997	3,586	9,888	10,585	10,081
Income Tax Rate	22.04%	19.9%	20.34%	20.19%	19.7%	17.79%	18.52%	17.25%	34.65%	26%	23.1%	25%
Invested Capital	80,186	79,762	79,616	79,260	76,827	76,913	75,887	71,543	80,845	87,504	84,627	89,264