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PG Q4 core EPS rose 6% y/y to $1.48, topping estimates; sales increased 2% to $20.9B on pricing and mix gains.
FY26 guidance includes core EPS of $6.83-$7.09 and y/y organic sales growth of flat to 4%.
PG returned more than $16B to shareholders in FY25 through $9.9B in dividends and $6.5B in buybacks.
The Procter & Gamble Company (PG - Free Report) reported solid fourth-quarter fiscal 2025 results, with sales and earnings per share (EPS) surpassing the Zacks Consensus Estimate and improving year over year. Results benefited from growth across all segments, led by improved pricing and a favorable mix.
Procter & Gamble’s core EPS of $1.48 per share increased 6% from the year-ago quarter and beat the Zacks Consensus Estimate of $1.43. Currency-neutral core EPS rose 5% year over year.
The company has reported net sales of $20.9 billion, up 2% year over year. Sales also surpassed the Zacks Consensus Estimate of $20.8 billion. Sales growth can be attributed to a 1% increase in pricing and mix, while volume and currency impacts were neutral.
Procter & Gamble Company (The) Price, Consensus and EPS Surprise
On an organic basis (excluding the impacts of acquisitions, divestitures and foreign exchange), sales rose 2% year over year, backed by higher pricing and mix, while organic volume had a neutral impact in the reported quarter. Our model predicted year-over-year organic revenue growth of 1.9% for the fourth quarter of fiscal 2025, with a 0.6% gain from pricing, a 0.9% rally in the product mix and a 0.4% rise in the organic volume.
The company’s net sales growth for the fiscal fourth quarter was led by a year-over-year increase of 2% each in the Baby, Feminine & Family Care, Fabric & Home Care, Grooming, and Health Care segments. Net sales for the Beauty segment were flat year over year. Organic sales rose 1% each for the Beauty, Grooming, Baby, Feminine & Family Care, and Fabric & Home Care segments. Meanwhile, organic sales improved 2% for the Health Care segment.
Shares of PG rose 1.2% in the pre-market session following the strong fourth-quarter fiscal 2025 results and a decent outlook for fiscal 2026. The Zacks Rank #3 (Hold) company’s stock has lost 3.4% in the past three months compared with the industry’s 2.6% decline.
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Procter & Gamble's Q4 Margins
The core gross margin declined 70 basis points (bps) year over year to 49.1%, while the reported gross margin fell 50 bps. Currency rates hurt the gross margin by 0.2%. The currency-neutral core gross margin contracted 50 bps to 49.3%. Gains from gross productivity savings of 240 bps and pricing of 50 bps were more than offset by 150 bps of adverse product mix, 70 bps of product/package reinvestments, 40 bps of higher commodity costs, 40 bps increase in costs from tariffs, and 40 bps of rounding and other items.
Core and currency-neutral selling, general and administrative expenses (SG&A), as a percentage of sales, declined 220 bps from the year-ago quarter to 28.3%. This decline was backed by 320 bps of productivity savings, including the reductions across marketing and overhead costs and adjustments to anticipated variable compensation payouts. SG&A rate also benefited from 60 bps of net sales growth leverage and rounding. These were partly offset by 160 bps of reinvestments and other items.
The core operating margin expanded 150 bps from the prior year to 20.8%. On a currency-neutral basis, the operating margin increased year over year by 170 bps to 21%. The operating margin included gross productivity savings of 560 bps.
We expected the core gross profit margin to grow 10 bps year over year in the fiscal fourth quarter to 49.9%. The core SG&A expense rate was anticipated to decline 150 bps, whereas our core operating margin projection suggested an increase of 150 bps to 20.8%.
Peek Into PG's Financials
Procter & Gamble ended fiscal 2025 with cash and cash equivalents of $9.6 billion, long-term debt of $25 billion, and total shareholders’ equity of $52.3 billion.
In fourth-quarter fiscal 2025, the company generated an operating cash flow of $5 billion. The adjusted free cash flow was $4 billion for the three months ended June 30, 2025, with an adjusted free cash flow productivity of 110%. As of fiscal 2025, the company generated adjusted free cash flow of $14.6 billion, with adjusted free cash flow productivity of 87%.
Procter & Gamble returned more than $16 billion of value to its shareholders in fiscal 2025, including $9.9 billion in dividend payouts and $6.5 billion in share buybacks.
PG's Fiscal 2026 Guidance
In fiscal 2026, Procter & Gamble anticipates delivering another strong year of organic sales growth, Core EPS growth and sturdy adjusted free cash flow productivity. The company expects year-over-year all-in sales growth of 1-5% for fiscal 2026, while organic sales are expected to be flat to up 4%. The company’s all-in sales are expected to include a 1% benefit from currency rates, and acquisitions and divestitures.
PG envisions net EPS growth of 3-9% in fiscal 2026 compared with the fiscal 2025 GAAP EPS of $6.51. The company expects core EPS of $6.83-$7.09, suggesting flat to 4% year-over-year growth from the fiscal 2025 core EPS of $6.83. The core EPS, at a mid-point of $6.96, implies 2% year-over-year growth.
The company predicts a commodity cost headwind of $200 million after tax for fiscal 2026. It also expects a $250-million headwind, after-tax, from higher interest expenses and core effective tax rate. Additionally, the guidance includes a $1-billion (before-tax) or $800-million (after-tax) cost headwind from tariffs. However, it expects a currency tailwind of $300 million after tax in fiscal 2026. Combined, these sum up to a headwind of 39 cents per share in fiscal 2026, indicating a 6% drag on core EPS growth.
PG estimates fiscal 2026 core effective tax rate of 20-21%, suggesting a 1% higher tax rate versus that reported in fiscal 2025 at the mid-point.
Procter & Gamble expects capital expenditure to be 4-5% of net sales in fiscal 2026. Adjusted free cash flow productivity is estimated to be 85-90%. The company intends to pay out dividends worth $10 billion, with share repurchases of $5 billion in fiscal 2026.
BJ delivered a trailing four-quarter earnings surprise of 17.7%, on average. The Zacks Consensus Estimate for BJ’s current financial-year sales and EPS indicates growth of 5.5% and 6.2%, respectively, from the year-ago numbers.
PepsiCo Inc. (PEP - Free Report) is one of the leading global food and beverage companies. The company currently has a Zacks Rank #2.
The Zacks Consensus Estimate for PEP’s 2025 sales indicates growth of 1.2% from the previous year’s reported figures. PepsiCo has a trailing four-quarter average earnings surprise of 1.01%.
The Vita Coco Company (COCO - Free Report) produces and distributes coconut water products under the Vita Coco brand name in the United States, Canada, Europe, the Middle East, Africa and the Asia Pacific. It presently flaunts a Zacks Rank #2.
The Zacks Consensus Estimate for Vita Coco’s 2025 sales and EPS indicates growth of 12.5% and 6.5%, respectively, from the prior-year reported levels. COCO delivered a trailing four-quarter earnings surprise of 28.2%, on average.
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Procter & Gamble Stock Rises on Q4 Earnings & Sales Beat, Strong View
Key Takeaways
The Procter & Gamble Company (PG - Free Report) reported solid fourth-quarter fiscal 2025 results, with sales and earnings per share (EPS) surpassing the Zacks Consensus Estimate and improving year over year. Results benefited from growth across all segments, led by improved pricing and a favorable mix.
Procter & Gamble’s core EPS of $1.48 per share increased 6% from the year-ago quarter and beat the Zacks Consensus Estimate of $1.43. Currency-neutral core EPS rose 5% year over year.
The company has reported net sales of $20.9 billion, up 2% year over year. Sales also surpassed the Zacks Consensus Estimate of $20.8 billion. Sales growth can be attributed to a 1% increase in pricing and mix, while volume and currency impacts were neutral.
Procter & Gamble Company (The) Price, Consensus and EPS Surprise
Procter & Gamble Company (The) price-consensus-eps-surprise-chart | Procter & Gamble Company (The) Quote
On an organic basis (excluding the impacts of acquisitions, divestitures and foreign exchange), sales rose 2% year over year, backed by higher pricing and mix, while organic volume had a neutral impact in the reported quarter. Our model predicted year-over-year organic revenue growth of 1.9% for the fourth quarter of fiscal 2025, with a 0.6% gain from pricing, a 0.9% rally in the product mix and a 0.4% rise in the organic volume.
The company’s net sales growth for the fiscal fourth quarter was led by a year-over-year increase of 2% each in the Baby, Feminine & Family Care, Fabric & Home Care, Grooming, and Health Care segments. Net sales for the Beauty segment were flat year over year. Organic sales rose 1% each for the Beauty, Grooming, Baby, Feminine & Family Care, and Fabric & Home Care segments. Meanwhile, organic sales improved 2% for the Health Care segment.
Shares of PG rose 1.2% in the pre-market session following the strong fourth-quarter fiscal 2025 results and a decent outlook for fiscal 2026. The Zacks Rank #3 (Hold) company’s stock has lost 3.4% in the past three months compared with the industry’s 2.6% decline.
Image Source: Zacks Investment Research
Procter & Gamble's Q4 Margins
The core gross margin declined 70 basis points (bps) year over year to 49.1%, while the reported gross margin fell 50 bps. Currency rates hurt the gross margin by 0.2%. The currency-neutral core gross margin contracted 50 bps to 49.3%. Gains from gross productivity savings of 240 bps and pricing of 50 bps were more than offset by 150 bps of adverse product mix, 70 bps of product/package reinvestments, 40 bps of higher commodity costs, 40 bps increase in costs from tariffs, and 40 bps of rounding and other items.
Core and currency-neutral selling, general and administrative expenses (SG&A), as a percentage of sales, declined 220 bps from the year-ago quarter to 28.3%. This decline was backed by 320 bps of productivity savings, including the reductions across marketing and overhead costs and adjustments to anticipated variable compensation payouts. SG&A rate also benefited from 60 bps of net sales growth leverage and rounding. These were partly offset by 160 bps of reinvestments and other items.
The core operating margin expanded 150 bps from the prior year to 20.8%. On a currency-neutral basis, the operating margin increased year over year by 170 bps to 21%. The operating margin included gross productivity savings of 560 bps.
We expected the core gross profit margin to grow 10 bps year over year in the fiscal fourth quarter to 49.9%. The core SG&A expense rate was anticipated to decline 150 bps, whereas our core operating margin projection suggested an increase of 150 bps to 20.8%.
Peek Into PG's Financials
Procter & Gamble ended fiscal 2025 with cash and cash equivalents of $9.6 billion, long-term debt of $25 billion, and total shareholders’ equity of $52.3 billion.
In fourth-quarter fiscal 2025, the company generated an operating cash flow of $5 billion. The adjusted free cash flow was $4 billion for the three months ended June 30, 2025, with an adjusted free cash flow productivity of 110%. As of fiscal 2025, the company generated adjusted free cash flow of $14.6 billion, with adjusted free cash flow productivity of 87%.
Procter & Gamble returned more than $16 billion of value to its shareholders in fiscal 2025, including $9.9 billion in dividend payouts and $6.5 billion in share buybacks.
PG's Fiscal 2026 Guidance
In fiscal 2026, Procter & Gamble anticipates delivering another strong year of organic sales growth, Core EPS growth and sturdy adjusted free cash flow productivity. The company expects year-over-year all-in sales growth of 1-5% for fiscal 2026, while organic sales are expected to be flat to up 4%. The company’s all-in sales are expected to include a 1% benefit from currency rates, and acquisitions and divestitures.
PG envisions net EPS growth of 3-9% in fiscal 2026 compared with the fiscal 2025 GAAP EPS of $6.51. The company expects core EPS of $6.83-$7.09, suggesting flat to 4% year-over-year growth from the fiscal 2025 core EPS of $6.83. The core EPS, at a mid-point of $6.96, implies 2% year-over-year growth.
The company predicts a commodity cost headwind of $200 million after tax for fiscal 2026. It also expects a $250-million headwind, after-tax, from higher interest expenses and core effective tax rate. Additionally, the guidance includes a $1-billion (before-tax) or $800-million (after-tax) cost headwind from tariffs. However, it expects a currency tailwind of $300 million after tax in fiscal 2026. Combined, these sum up to a headwind of 39 cents per share in fiscal 2026, indicating a 6% drag on core EPS growth.
PG estimates fiscal 2026 core effective tax rate of 20-21%, suggesting a 1% higher tax rate versus that reported in fiscal 2025 at the mid-point.
Procter & Gamble expects capital expenditure to be 4-5% of net sales in fiscal 2026. Adjusted free cash flow productivity is estimated to be 85-90%. The company intends to pay out dividends worth $10 billion, with share repurchases of $5 billion in fiscal 2026.
Here’s How Better-Ranked Stocks Fared
BJ's Wholesale Club (BJ - Free Report) has emerged as one of the preferred destinations for shoppers when it comes to essentials and other items. The company currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
BJ delivered a trailing four-quarter earnings surprise of 17.7%, on average. The Zacks Consensus Estimate for BJ’s current financial-year sales and EPS indicates growth of 5.5% and 6.2%, respectively, from the year-ago numbers.
PepsiCo Inc. (PEP - Free Report) is one of the leading global food and beverage companies. The company currently has a Zacks Rank #2.
The Zacks Consensus Estimate for PEP’s 2025 sales indicates growth of 1.2% from the previous year’s reported figures. PepsiCo has a trailing four-quarter average earnings surprise of 1.01%.
The Vita Coco Company (COCO - Free Report) produces and distributes coconut water products under the Vita Coco brand name in the United States, Canada, Europe, the Middle East, Africa and the Asia Pacific. It presently flaunts a Zacks Rank #2.
The Zacks Consensus Estimate for Vita Coco’s 2025 sales and EPS indicates growth of 12.5% and 6.5%, respectively, from the prior-year reported levels. COCO delivered a trailing four-quarter earnings surprise of 28.2%, on average.