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P&G (PG) Up 2.7% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Procter & Gamble (PG - Free Report) . Shares have added about 2.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is P&G due for a pullback? Well, first let's take a quick look at the latest earnings report in order to get a better handle on the recent drivers for Procter & Gamble Company (The) before we dive into how investors and analysts have reacted as of late.
Procter & Gamble 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 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. 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.
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.
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.
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.
How Have Estimates Been Moving Since Then?
Since the earnings release, investors have witnessed a downward trend in estimates review.
VGM Scores
Currently, P&G has a average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Following the exact same course, the stock was allocated a score of D on the value side, putting it in the bottom 40% for value investors.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, P&G has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
P&G belongs to the Zacks Consumer Products - Staples industry. Another stock from the same industry, Albertsons Companies, Inc. (ACI - Free Report) , has gained 0.3% over the past month. More than a month has passed since the company reported results for the quarter ended May 2025.
Albertsons Companies reported revenues of $24.88 billion in the last reported quarter, representing a year-over-year change of +2.5%. EPS of $0.55 for the same period compares with $0.66 a year ago.
Albertsons Companies is expected to post earnings of $0.40 per share for the current quarter, representing a year-over-year change of -21.6%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.5%.
Albertsons Companies has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.
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P&G (PG) Up 2.7% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Procter & Gamble (PG - Free Report) . Shares have added about 2.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is P&G due for a pullback? Well, first let's take a quick look at the latest earnings report in order to get a better handle on the recent drivers for Procter & Gamble Company (The) before we dive into how investors and analysts have reacted as of late.
Procter & Gamble Q4 Earnings & Sales Beat, Strong View
Procter & Gamble 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 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. 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.
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.
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.
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.
How Have Estimates Been Moving Since Then?
Since the earnings release, investors have witnessed a downward trend in estimates review.
VGM Scores
Currently, P&G has a average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Following the exact same course, the stock was allocated a score of D on the value side, putting it in the bottom 40% for value investors.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, P&G has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
P&G belongs to the Zacks Consumer Products - Staples industry. Another stock from the same industry, Albertsons Companies, Inc. (ACI - Free Report) , has gained 0.3% over the past month. More than a month has passed since the company reported results for the quarter ended May 2025.
Albertsons Companies reported revenues of $24.88 billion in the last reported quarter, representing a year-over-year change of +2.5%. EPS of $0.55 for the same period compares with $0.66 a year ago.
Albertsons Companies is expected to post earnings of $0.40 per share for the current quarter, representing a year-over-year change of -21.6%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.5%.
Albertsons Companies has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.