Procter & Gamble (PG) stock price has done well in the past few decades, as the company has positioned itself as the ultimate dividend king. 

It has boosted its dividends for 67 years, while its stock has survived major events like the First and Second World Wars, the Cold War, The Great Depression, the Global Financial Crisis (GFC), and the Covid-19 pandemic. 

Its stock has more than doubled in the last decade, pushing its market capitalization to over $400 billion. It has also continued to outperform some of its closest competitors like Colgate-Palmolive, Unilever, Kimberly-Clark, and Churchill and Dwight, as shown below.

Global diversified brand

Procter & Gamble is one of the most popular brands, whose products are used by millions of people each day. 

It owns some of the most recognizable brands globally like Pampers, Always, Ariel, Downy, Gillette, and Olay.

It is a highly diversified company that focuses on five key areas like beauty, grooming, health care, fabric & home care, and baby, feminine, and family care.

Fabric and home care is its biggest business, accounting for 36% of net sales, followed by baby, feminine, and family care, health care, and beauty.

P&G’s business has been doing well, helped by the growing population and middle class in most countries. A rising population means more people spending on more products like Always and Pampers.

The challenge, however, is that its business is highly competitive, with companies like Unilever, Kimberly Clark, and Churchill and Dwight fighting for market share. Most importantly, it is competing with newer, and often cheaper brands from countries like India and China.

The other challenge is that e-commerce has changed the fast-moving consumer goods (FMCG) industry. Unlike in the past when shelving space was everything, today, any company can sell on websites like Amazon.

Still, P&G and other big brands have two main advantages. First, they are well-known brands that have existed for generations. Second, P&G has the financial resources to outspend smaller companies in Amazon advertising. Third, it also benefits from shelve space in places like Walmart and Target.

As a result, its annual revenue has grown steadily in the last decade, moving from $74 billion in 2014 to $82 billion last year. Its annual profits have also continued rising.

Read more: Cramer: buy P&G as it is ‘so much better than it used to be’

P&G earnings ahead

The next important catalyst for Procter & Gamble will be its upcoming financial results scheduled for October 18th. 

These results will provide more color on its business. The most recent results showed that its volume in the beauty and baby, feminine, and family care business declined by 1% in the last quarter. 

Volume in the other three segments rose by 2%. The company has previously managed to offset its weaker volumes by hiking prices.

Its revenue was flat at $20.5 billion while its net earnings dropped by 7% to $3.14 billion. This happened as its operating margin dropped from 20.3% to 18.9% in the last quarter. 

Analysts expect Procter & Gamble’s revenue will come in at $21.96 billion, an 11% increase from the same quarter last year. For the year, revenue is expected to grow by 2.50% to $86.14 billion.

Read more: Procter & Gamble (P&G) sees lackluster sales increase in latest earnings, but sweetens the deal with EPS

Valuation concerns remain

The biggest issue for Procter & Gamble is that its stock is highly overvalued considering that its growth has stalled. This premium is mostly because P&G is one of the few dividend kings in the US, having boosted its payouts in the last 50 years. 

P&G trades at 24 times earnings, which is slightly higher than the S&P 500 average of 21, and the sector median of 20. Its forward EV to EBITDA ratio of 17 is much higher than the sector median of 10.95.

P&G’s valuation means that if you bought the company for the current market cap, it will take you over 24 years to recover your funds. 

However, as we have seen with companies like Moody’s, Visa, and Mastercard, it is common for some blue-chip companies to be overvalued for a long time. P&G will therefore continue doing well as long as the company publishes modest results.

Procter & Gamble stock analysis

On the weekly chart, we see that the P&G share price has been in a strong bull run for a long time. It has remained above all moving averages, meaning that bulls are in control. 

The stock has, however, formed a rising wedge pattern, which is a popular bearish sign in the market. Also, the two lines of the MACD have made a bearish crossover pattern. The Relative Strength Index (RSI) has also formed an ascending channel, and is moving downwards.

Therefore, the stock will likely have a bearish breakout after publishing its financial results. If this happens, the stock could retreat to the next point at $160. However, a move above the year-to-date high of $177.80 will point to more gains.

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Warby Parker (WRBY) stock price has underperformed the market since going public through a direct listing in September 2021. It has barely moved since 2022, and it remains 73% below its highest level on record. This performance has brought its market valuation from over $3 billion to about $1.8 billion.

In contrast, EssilorLuxottica (EL) stock has soared to a record high of 218 euros, bringing its market cap to over $100 billion. It has jumped by more than 165% from its lowest point in 2020, making it one of the best-performing companies in France.

Warby Parker’s business is doing well

Warby Parker is a leading company in the eyeglasses market. Started in 2010 as an online-only glass company, it went public in 2021 and has expanded its business to retail stores in the US and Canada.

Warby Parker’s business model is relatively simple. Instead of selling glasses for hundreds of dollars, the company sells most of its eyeglasses and sunglasses for $95. 

In the past few years, however, it has introduced more pricey sunglasses, with the most expensive ones selling for $195. These more expensive glasses are doing relatively well, and are bringing in more margins.

Warby Parker’s glasses are of a high quality, and even the most expensive ones, cost much less than those made by its competitors. For example, a quick look at the Sunglass Hut website shows that the most popular sunglasses cost over $300. 

Warby Parker’s quality and pricing has seen its revenues do well over time. Its annual revenue rose from $370 million in 2019 to over $670 million in the last financial year. Its trailing twelve months revenue rose to $720 million. 

Warby’s customers have also jumped sharply in the past few years. Data shows that the company sold its glasses to 1.78 million customers in 2019, a figure that grew to 2.33 million in 2023, meaning that the momentum will continue.

This growth is mostly because of its hybrid business model of combining its online platform with its 256 stores. These stores eliminate the fear that most people have when buying its products online.

Revenue is growing, no debt

The most recent results showed that Warby Parker’s revenue grew by 13.3% in the second quarter as its average revenue per customer jumped to $302. 

Analysts expect that its revenue growth continued in the third quarter, with the figure expected to grow by 15.40% to $190 million. For the year, its revenue is expected to be $761 million, a 13.70% increase from 2023. The figure will hit $860 million in 2025, and possibly $1 billion in the following year. 

Most importantly, Warby Parker has been narrowing its losses in the past few years. Its net loss stood at $144 million in 2021, and dropped to $110 million and $63 million in 2022 and 2023, respectively. Analysts expect that the company will become net profitable by either 2024 or 2025. It also has zero debt.

Most analysts tracking the company have a bullish outlook, with the most notable ones being JMP Securities, who upgraded it to market outperform. Stifel, Loop Capital, and UBS have a neutral outlook for the stock. 

Warby Parker stock has bottomed

On the daily chart above, we see that the Warby Parker stock price has moved sideways in the past few years as it bottomed at $9.96. It has remained at the 50-day and 100-day Exponential Moving Averages (EMA), while the Average True Range (ATR) has retreated. 

Therefore, I believe that Warby Parker’s business is highly undervalued, and that the stock will likely bounce back in the long term. If this happens, the next point to watch will be at $18.78, its highest level in December 2022.

EssilorLuxottica’s business has slowed

EssilorLuxottica, the biggest business on the other hand, is doing well even as its revenue growth has eased. Its revenue rose by 5.3% in the first half of the year to 13.2 billion euros, while its net profit was 1.76 billion.

EssilorLuxottica’s growth was likely because of its acquisitions. Some of its recent acquisitions were Optical Investment Group, a leading player in Romania, and Supreme from VF Corporation.

Still, we believe that Warby Parker is a better investment than EssilorLuxottica at these levels. It is growing at a faster rate, has zero debt, and has room to expand its business in the United States and Europe. 

Warby Parker is also relatively cheaper than EssilorLuxottica. It has a price-to-sales ratio of 2.0x compared to EssilorLuxottica’s 3.6.

A good example of what is happening here is the automaker industry, where Tesla has disrupted the sector and become the biggest player in the sector. It has done much better than companies like Toyota, Volkswagen, and BMW. 

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Affirm (AFRM) stock has crawled back in the past few weeks, rising from the August low of $22.2 to $47, a 112% increase. It has also soared by 425% from its lowest level in 2023, making it one of the best-performing fintech companies in the US.

Rise of BNPL

Affirm is a top name in the fast-growing Buy Now Pay Later (BNPL), which has drastically changed and disrupted the financial services industry in the past few years. 

The industry was estimated at $378 billion in 2023, and will continue seeing double-digit growth in the next decade. 

Many consumers see BNPL as a better alternative to credit cards, which charge substantially high interest rates and late fees.

In Affirm’s case, the company does not charge any interest for most payments. Instead, most customers buy and pay in four equal installments.

It makes money by charging companies a commission for all sales it processes provided that the customer pays back the money in four bi-weekly installments. It also has interest-bearing installment loans. 

Affirm has grown rapidly over the years as it continued to add more companies as merchants. The most important addition was Amazon, the biggest e-commerce company with millions of sellers. It also has a partnership with Walmart, the biggest retailer globally.

A key challenge that Affirm faces is that the industry has become highly competitive, with firms like AfterPay, Klarna, and Zip vying for market share in the US and other countries. 

Its benefit, however, is that it has a sizable market share in the US. Also, the business has some substantial barriers to entry, making it more difficult for more companies to get in. 

Affirm’s business is growing

Affirm has become one of the fastest-growing fintech companies in the US. Its active customers have grown to over 18.6 million, up from 15.6 million in June last year. This is notable for a company that had 14 million customers in the fourth quarter of 2022.

Affirm has also continued to add more merchants in its platform. It ended the last quarter with 303k merchants, up from 234k in the fourth-quarter of 2022. This trend will likely continue in the coming years as more businesses embrace the trend.

Affirm’s annual revenue has risen from $509 million in 2020 to over $2.32 billion in the last financial year. Most of this growth accelerated during the Covid-19 pandemic when most customers turned to BNPL platforms for their checkouts.

The most recent financial results revealed that Affirm’s gross merchandise volume (GMV) rose to $7.2 billion, up from $5.5 billion in the same period last year. 

Active customers soared to 18.6 million, while the number of transactions per customer rose to 4.9. 

Affirm’s revenues rose to over $659 million in the last quarter, up from $446 million in the same quarter last year.

The management expects that GMV in Q1’254 will be between $7.1 billion and $7.4 billion, while its revenue will be between $640 million and $670 million. Its adjusted operating margin will be between 14% and 16%.

Affirm has never been profitable. Nonetheless, the company is narrowing its losses. Its annual loss moved from $985 million in 2023 to $517 million. The most recent quarterly net loss narrowed from $206 million to over $45 million.

Most importantly, Affirm is adding more services to its product, including the Affirm Money Account, where people can save and earn returns.

Read more: Affirm is no longer the exclusive provider of BNPL loans at Walmart

Affirm’s earnings ahead

Affirm stock is now reacting to a few factors. First, it is reacting to the actions by the Federal Reserve, which has started cutting interest rates. Lower rates could incentivise more consumer spending in the coming years, benefiting the biggest players in the BNPL industry.

Second, the company will publish its quarterly earnings on November 8. According to Yahoo Finance, analysts expect that Affirm’s revenue will be $663 million, up by 33% from the same period last year. 

For the year, its revenue is expected to be $3.02 billion followed by $3.67 billion in the next financial year. If the trend continues, it means that Affirm’s annual revenue will get to $5 billion in the next few years. 

Most analysts are optimistic about the Affirm stock price. Wells Fargo upgraded it to overweight, while Morgan Stanley and BTIG upgraded it to equal-weight and buy, respectively.

Affirm stock price analysis

AFRM chart by TradingView

The daily chart shows that the AFRM share price has recovered modestly in the past few weeks. It has formed a rounded bottom, a popular bullish sign, and moved to the 23.6% Fibonacci Retracement.

The stock has also formed a golden cross pattern as the 200-day and 50-day Exponential Moving Averages (EMA) have formed a golden cross pattern. 

Oscillators like the Relative Strength Index (RSI) and the MACD have also pointed upwards. Therefore, the stock will likely continue rising in the coming weeks. These gains will be confirmed if it rises above the key resistance at $52.18, its highest point in December last year.

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Victoria’s Secret (VSCO) stock has stabilised in the past few weeks as investors focus on the recent leadership transition and the ongoing turnaround. After bottoming at $13.58 in October last year, the stock has bounced back to $26.05. 

Fallen angel

Victoria’s Secret has become one of the top fallen angels in the retail industry. A company that was once a beloved brand in the past few decades has lost its shine as newer brands have come up. 

Demand for its products has waned over the years. That is partly because of the rising competition in the industry, and the view that the firm had become woke.

Victoria’s Secret’sannual revenue has been in a downward trend in the past few years. It peaked at $7.5 billion in 2020, and then dropped to $6.18 billion in the last financial year.

Its annual profits also narrowed from over $646 million in 2021 to $109 million, a trend that may continue in the coming years. 

Therefore, the company is hoping that Hillary Super, a veteran in the retail industry will help to turn its business. Before VSCO, she was the Savage X Fenty, one of the most popular brands among young people. 

She was also the CEO of Anthropologie Group, a company owned by Urban Outfitters. She is credited to turning around the brand into one of the best performers in the industry.

Super has also had experience in other popular brands like Guess?, American Eagle, Gap, and Ann Taylor. 

Her strategy is to help grow the company’s brands like Victoria’s Secret and PINK. She is also expected to continue focusing on its cost structure to focus on its profitability. Also, the company will continue managing its store count, by closing underperforming stores, and opening new ones.

To be fair: Victoria’s Secret is not the only specialty retailer that is struggling in the United States. In the healthcare industry, companies like CVS Health and Walgreens Boots Alliance are crumbling, with their stocks falling by over 30% this year.

Similarly, Ulta Beauty, a leading player in the beauty industry has also crashed hard. Dollar stores like Dollar Tree and Dollar General are some of the worst-performers in the S&P 500 index this year. 

Victoria’s Secret business is not doing well

The most recent financial results showed that Victoria’s Secret’s business was not doing well as uts sales continued falling.

Revenue in the three weeks to August 3 dropped to $1.41 billion, down from the $1.42 billion in the same period last year. 

On the positive side, its improved cost structure meant that its profitability metrics were relatively good. Its net income soared from $19.4 million to $31.08 million.

Its guidance for the third-quarter was that revenue would rise by low-single digits. Analysts expect that the real figure will be $1.29 billon. 

Its adjusted operating loss will be between $40 million and $60 million, while its annual operating profit will be between $275 million and $300 million.

Valuation and debt issues

A key concern about Victoria’s Secret is that it has substantial debt and a weak credit rating. Moody’s and S&P Global have a negative outlook, which raises its credit risk.

These credit issues are because of its substantial long debt. It has $1.1 billion in long-term debt and $1.4 billion in long-term operating lease liabilities. Some of these maturities will come in 2025 through 2028.

Victoria’s Secret is also facing substantial challenges because of the rising competition in the industry. For example, Rihanna’s Savage x Fenty business has received a valuation of over $1 billion as its sales soared. 

Kim Kardashian’s Skims has received a $4 billion valuation, while American Eagle’s Aerie brand has continued growing. 

On the positive side, there are signs that Victoria’s Secret’s business is not highly overvalued as it has a forward P/E ratio of 14, lower than the industry’s average of 19.

Victoria’s Secret’s forward EV-to-EBITDA of 8.73 is lower than the industry average of 10. This cheap valuation is because of the ongoing concerns about the company’s business in the long term.

Victoria’s Secret stock analysis

The daily chart shows that the VSCO share price bottomed at $13.58 in October last year, and has rebounded to $28. It has crossed the average estimate by analysts at $24.12.

The stock has moved above the 50-day and 100-day moving averages (EMA). There are signs that it has formed a double-bottom chart pattern, a popular reversal sign.

Therefore, the stock’s outlook is neutral with a bullish bias for now. More upside will be confirmed if it moves above the double-bottom’s neckline at $30.8. If this happens, it could climb to the 50% retracement point at $44, which is about 72% from the current level.

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Uber Technologies (UBER) stock price went parabolic last week, soaring to a record high of $86 as investors focused on Tesla’s robotaxi event. It has been one of the best-performing companies this year as its stock has jumped by over 40%. This rally has brought its market cap to over $181 billion.

Tesla’s robotaxi event

The most recent catalyst for the Uber share price was Thursday’s Tesla event in which the company showcased its full self-driving capabilities. 

Most analysts believe that the event underwhelmed expectations, which explains why Tesla shares plunged hard on Friday.

For a long time, some analysts have warned that Tesla Robotaxi was a major threat for a company like Uber.

Besides, anyone will now be able to convert their Tesla vehicles into taxis. For example, a person with an 8 to 5 job will drive his Tesla to work, and then deploy it into the taxi business, where it will ferry customers.

Another example is where a Tesla car owner goes for a vacation. Instead of his car staying in the garage, it is deployed to the taxi business. 

To a large extent, this business makes sense to many people. For example, in New York, the average Uber driver in New York makes between $15.7 and $22 a hour. Assuming the mid-point at $18.85, it means that a Tesla owner would make $100 if he added it to the taxi ecosystem.

However, analysts believe that the situation is more difficult than what Elon Musk promised. For one, it will likely take longer to get these robotaxi approvals in most cities.

Therefore, Uber’s stock surge was a sign that investors anticipate the business to continue thriving in the long term. Also, Uber has a large international business that will continue doing well over time.

Uber’s growth has accelerated

Uber has been one of the most disruptive companies globally. It introduced the concept of ride hailing that has changed how people travel.

At the same time, it expanded to other industries like food and grocery delivery, which has gained substantial market share.

Uber has also won its battle against competitors. For example, it sold its Southeast Asian operations to Grab, and then took a sizable share of its business. 

Uber’s annual revenues have soared from over $13 billion in 2019 to over $37 billion in 2023. Analysts believe that this trend will continue in the coming years as demand for mobility increases. 

It has also started to focus on profitability by reducing its large discounts that it offered a few years ago. 

Uber’s monthly active platform users has continued growing even as competition in the industry has remained high. It had over 156 million customers in the last quarter, a big increase from 137 million in the same period last year. Monthly trips have also surged in the past few years.

The most recent financial results showed that Uber’s revenue increased from $9.23 billion to over $10.7 billion. Its free cash flow has risen from over $1.14 billion to $1.72 billion, while its net income rose to $1.02 billion.

Uber’s growth to continue

The next catalyst for the Uber stock price will be its coming earnings on October 31st. Analysts expect these numbers to show that its revenue will be $10.97 billion, a 18% increase from the same period last year. 

Revenues in the final quarter of the year will be $11.58 billion, bringing its annual figure to $43 billion. Uber will then cross the $50 billion revenue figure in the next financial year. 

Still, there are concerns about Uber’s valuation, which most analysts believe has become highly stretched. 

Uber has a forward price-to-sales ratio of 4.5, higher than the sector median of 1.51. This means that if you bought the company today for $181 billion, it will take you four years to get recover your funds in terms of revenues. 

Worse, Uber hads a forward price-to-earnings ratio of 40, higher than the sector median of 20.75. As such, assuming no more growth, it means that it will take 40 years to recover your funds in terms of profits. Uber is more expensive than companies like Nvidia and Microsoft.

Uber stock price analysis

Uber chart by TradingView

The weekly chart shows that the Uber shares have been in a strong bull run in the past few months. It crossed the important resistance point at $82.12 last week. Moving above that level was important as it invalidated the double-top pattern that was forming. In most cases, this is one of the most popular reversal patterns.

Uber has remained above the 50-week moving average, while the Relative Strength Index (RSI) and the MACD indicators have pointed upwards. Therefore, the stock will likely continue soaring, as bulls target the next point at $100. 

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