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Procter & Gamble Q2 Earnings Preview: Buy Now or Stay Cautious?
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Key Takeaways
PG is set to report 2Q26 results on Jan. 22, with revenues projected to rise 1.6% y/y.
PG faces margin pressure from higher commodity costs, tariffs and intense promotions in key markets.
PG's organic sales growth is expected to be modest, led by the Beauty, Health Care and Grooming segments.
The Procter & Gamble Company (PG - Free Report) , also known as P&G, is set to report second-quarter fiscal 2026 results on Jan. 22, before the opening bell. The company is expected to have witnessed year-over-year sales growth in the to-be-reported quarter.
The Zacks Consensus Estimate for fiscal second-quarter revenues is pegged at $22.23 billion, indicating a 1.6% rise from the prior-year quarter’s reported figure. The consensus mark for PG’s earnings is pegged at $1.87 per share, indicating a 0.5% decline from the year-ago quarter’s actual. The consensus mark for earnings has moved down by a penny in the past 30 days.
PG has a trailing four-quarter earnings surprise of 2.3%, on average. The company delivered an earnings surprise of 4.7% in the first quarter of fiscal 2026.
PG’s Earnings Whispers
Our proven model does not conclusively predict an earnings beat for Procter & Gamble this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the case here. You can uncover the best stocks before they are reported with our Earnings ESP Filter.
Procter & Gamble has an Earnings ESP of -0.82% and a Zacks Rank #4 (Sell).
Procter & Gamble’s second-quarter fiscal 2026 results are expected to reflect the impacts of several operating and strategic trends. The company has been navigating several challenges, including elevated commodity costs, higher costs from tariffs and challenges related to tough macroeconomic conditions and geopolitical tensions. Additionally, the competitive backdrop in developed markets remains intense. Management acknowledged heightened promotional activity in categories, such as Fabric Care, Baby Care and Oral Care, particularly in the United States and Europe.
The company continues to witness elevated commodity costs, which pressured the gross margin in first-quarter fiscal 2026, and are expected to remain a challenge throughout fiscal 2026. While the company has made strong progress on productivity and cost-saving initiatives, inflation in raw materials, packaging, freight and labor has offset part of these gains.
PG expects increases in commodities to erode margins if price increases are not sustainable in the market, particularly as consumers remain price-conscious. Management predicts a commodity cost headwind of $100 million after tax for fiscal 2026. This continued drag highlights that the high-cost environment should have pressured the gross margin in the to-be-reported quarter.
Our model predicts a year-over-year core gross margin decline of 50 bps for the fiscal second quarter. We expect the core operating margin to fall by 80 bps in the quarter.
Tariffs represent another pressing challenge for Procter & Gamble. Management expects higher costs from tariffs of $400 million, after-tax, for fiscal 2026. Management anticipates an after-tax headwind of about $250 million for fiscal 2026 due to modestly higher net interest expenses and an increased core effective tax rate compared with the previous year. We expect part of these tariff impacts to be accounted for in the fiscal second quarter, hurting earnings in the to-be-reported quarter.
PG is pursuing mitigation through sourcing flexibility, productivity and selective pricing. However, management cautioned that tariff relief may be offset by pricing rollbacks if duties are reduced. As a result, tariffs remain a structural uncertainty, clouding earnings visibility and weighing heavily on PG’s EPS growth in the near term.
However, Procter & Gamble continues to leverage its strong portfolio of daily-use products, where performance directly drives consumer brand choice, to deliver steady organic growth. The company’s integrated strategy, built on innovation, market expansion and productivity, has enabled it to adapt to shifting consumer dynamics and maintain competitiveness.
Innovation execution is a key swing factor. The company is rolling out major product upgrades and new formats across core franchises, with management repeatedly emphasizing that sustainable growth will come from superior performance rather than price-led tactics. The company’s focus on core categories and innovation continues to fuel performance, likely aiding organic sales in the fiscal second quarter.
Our model predicts year-over-year organic sales growth of 1% for PG in the second quarter of fiscal 2026. Our model estimates organic sales growth of 2% each for the Beauty and Health Care segments, and 4% for the Grooming segment. We expect organic sales for both the Fabric & Home Care, and and Baby, Feminine & Family Care segments to be flat year over year.
Investors should watch progress on restructuring and productivity initiatives. P&G has actively been streamlining its portfolio, supply chain and organizational structure to fund reinvestment in brands while improving agility. Evidence that these actions are translating into better execution, cost discipline and reinvestment capacity will be important, especially as the company navigates tariff and cost-related uncertainty.
Procter & Gamble’s Price Performance & Valuation
PG shares have declined 6.7% in the past six months compared with the industry’s drop of 8.4%. The stock has lagged the Zacks Consumer Staples sector’s fall of 3.2% and the S&P 500’s 13% growth.
PG’s 6-Month Performance
Image Source: Zacks Investment Research
The Procter & Gamble stock has underperformed The Clorox Company’s (CLX - Free Report) decline of 13.1% in the past six months. However, the stock has fared better than its peers, Colgate-Palmolive Company (CL - Free Report) and Church & Dwight Co., Inc. (CHD - Free Report) , which have lost 2.4% and 6.1%, respectively, in the past six months.
From the valuation standpoint, Procter & Gamble is trading at a forward 12-month P/E multiple of 20.18X, exceeding the industry’s average of 18.2X but below the S&P 500’s average of 23.29X. PG’s valuation appears pricey relative to the industry.
Image Source: Zacks Investment Research
Given the premium valuation, investors may face significant risks if the company's future performance does not meet expectations. The consumer goods market is becoming increasingly competitive and Procter & Gamble’s innovation and market expansion may not suffice to drive significant growth. Macroeconomic challenges and heightened competition may impede the company's ability to sustain its current growth trajectory.
Investment Thesis
Procter & Gamble’s investment appeal rests on the durability of its brand portfolio, disciplined execution and a strategy designed to perform through volatile consumer and macro conditions. Management emphasized consistent organic growth, driven by broad-based demand, strong brand equity and a steady cadence of innovation across core daily-use categories. The company’s integrated superiority model, linking product innovation, brand communication, retail execution, productivity and portfolio focus, is helping PG defend value positioning in developed markets while accelerating momentum in faster-growing regions, such as China and Latin America.
While near-term pressures from competitive intensity, tariffs and input costs persist, PG is proactively addressing these through restructuring, supply-chain modernization and targeted portfolio exits to improve agility and returns. Strong cash generation continues to support shareholder returns and reinvestment in innovation, reinforcing PG’s profile as a resilient consumer staples leader with the ability to compound value across cycles.
Conclusion
Procter & Gamble presents a mixed near-term risk-reward profile heading into its fiscal second-quarter results. The company’s defensive business model, strong brand equity and steady organic growth provide downside support, particularly in an uncertain macro environment. However, ongoing margin pressures from commodities and tariffs, coupled with elevated competitive intensity, are likely to limit earnings upside in the near term.
With the stock trading at a premium to the industry and earnings expectations trending modestly lower, investors may prefer a cautious stance. Existing shareholders may consider holding the stock for its stability and long-term fundamentals, while closely monitoring execution on innovation, pricing and productivity initiatives. For new investors, waiting for clearer signs of margin recovery or a more attractive valuation could be prudent. Overall, PG remains a high-quality consumer staples name, but near-term returns may hinge more on cost management and execution than on meaningful growth acceleration.
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Procter & Gamble Q2 Earnings Preview: Buy Now or Stay Cautious?
Key Takeaways
The Procter & Gamble Company (PG - Free Report) , also known as P&G, is set to report second-quarter fiscal 2026 results on Jan. 22, before the opening bell. The company is expected to have witnessed year-over-year sales growth in the to-be-reported quarter.
The Zacks Consensus Estimate for fiscal second-quarter revenues is pegged at $22.23 billion, indicating a 1.6% rise from the prior-year quarter’s reported figure. The consensus mark for PG’s earnings is pegged at $1.87 per share, indicating a 0.5% decline from the year-ago quarter’s actual. The consensus mark for earnings has moved down by a penny in the past 30 days.
PG has a trailing four-quarter earnings surprise of 2.3%, on average. The company delivered an earnings surprise of 4.7% in the first quarter of fiscal 2026.
PG’s Earnings Whispers
Our proven model does not conclusively predict an earnings beat for Procter & Gamble this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the case here. You can uncover the best stocks before they are reported with our Earnings ESP Filter.
Procter & Gamble has an Earnings ESP of -0.82% and a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank stocks here.
Key Trends to Watch Ahead of PG's Q2 Earnings
Procter & Gamble’s second-quarter fiscal 2026 results are expected to reflect the impacts of several operating and strategic trends. The company has been navigating several challenges, including elevated commodity costs, higher costs from tariffs and challenges related to tough macroeconomic conditions and geopolitical tensions. Additionally, the competitive backdrop in developed markets remains intense. Management acknowledged heightened promotional activity in categories, such as Fabric Care, Baby Care and Oral Care, particularly in the United States and Europe.
The company continues to witness elevated commodity costs, which pressured the gross margin in first-quarter fiscal 2026, and are expected to remain a challenge throughout fiscal 2026. While the company has made strong progress on productivity and cost-saving initiatives, inflation in raw materials, packaging, freight and labor has offset part of these gains.
PG expects increases in commodities to erode margins if price increases are not sustainable in the market, particularly as consumers remain price-conscious. Management predicts a commodity cost headwind of $100 million after tax for fiscal 2026. This continued drag highlights that the high-cost environment should have pressured the gross margin in the to-be-reported quarter.
Our model predicts a year-over-year core gross margin decline of 50 bps for the fiscal second quarter. We expect the core operating margin to fall by 80 bps in the quarter.
Tariffs represent another pressing challenge for Procter & Gamble. Management expects higher costs from tariffs of $400 million, after-tax, for fiscal 2026. Management anticipates an after-tax headwind of about $250 million for fiscal 2026 due to modestly higher net interest expenses and an increased core effective tax rate compared with the previous year. We expect part of these tariff impacts to be accounted for in the fiscal second quarter, hurting earnings in the to-be-reported quarter.
PG is pursuing mitigation through sourcing flexibility, productivity and selective pricing. However, management cautioned that tariff relief may be offset by pricing rollbacks if duties are reduced. As a result, tariffs remain a structural uncertainty, clouding earnings visibility and weighing heavily on PG’s EPS growth in the near term.
However, Procter & Gamble continues to leverage its strong portfolio of daily-use products, where performance directly drives consumer brand choice, to deliver steady organic growth. The company’s integrated strategy, built on innovation, market expansion and productivity, has enabled it to adapt to shifting consumer dynamics and maintain competitiveness.
Innovation execution is a key swing factor. The company is rolling out major product upgrades and new formats across core franchises, with management repeatedly emphasizing that sustainable growth will come from superior performance rather than price-led tactics. The company’s focus on core categories and innovation continues to fuel performance, likely aiding organic sales in the fiscal second quarter.
Our model predicts year-over-year organic sales growth of 1% for PG in the second quarter of fiscal 2026. Our model estimates organic sales growth of 2% each for the Beauty and Health Care segments, and 4% for the Grooming segment. We expect organic sales for both the Fabric & Home Care, and and Baby, Feminine & Family Care segments to be flat year over year.
Investors should watch progress on restructuring and productivity initiatives. P&G has actively been streamlining its portfolio, supply chain and organizational structure to fund reinvestment in brands while improving agility. Evidence that these actions are translating into better execution, cost discipline and reinvestment capacity will be important, especially as the company navigates tariff and cost-related uncertainty.
Procter & Gamble’s Price Performance & Valuation
PG shares have declined 6.7% in the past six months compared with the industry’s drop of 8.4%. The stock has lagged the Zacks Consumer Staples sector’s fall of 3.2% and the S&P 500’s 13% growth.
PG’s 6-Month Performance
Image Source: Zacks Investment Research
The Procter & Gamble stock has underperformed The Clorox Company’s (CLX - Free Report) decline of 13.1% in the past six months. However, the stock has fared better than its peers, Colgate-Palmolive Company (CL - Free Report) and Church & Dwight Co., Inc. (CHD - Free Report) , which have lost 2.4% and 6.1%, respectively, in the past six months.
From the valuation standpoint, Procter & Gamble is trading at a forward 12-month P/E multiple of 20.18X, exceeding the industry’s average of 18.2X but below the S&P 500’s average of 23.29X. PG’s valuation appears pricey relative to the industry.
Image Source: Zacks Investment Research
Given the premium valuation, investors may face significant risks if the company's future performance does not meet expectations. The consumer goods market is becoming increasingly competitive and Procter & Gamble’s innovation and market expansion may not suffice to drive significant growth. Macroeconomic challenges and heightened competition may impede the company's ability to sustain its current growth trajectory.
Investment Thesis
Procter & Gamble’s investment appeal rests on the durability of its brand portfolio, disciplined execution and a strategy designed to perform through volatile consumer and macro conditions. Management emphasized consistent organic growth, driven by broad-based demand, strong brand equity and a steady cadence of innovation across core daily-use categories. The company’s integrated superiority model, linking product innovation, brand communication, retail execution, productivity and portfolio focus, is helping PG defend value positioning in developed markets while accelerating momentum in faster-growing regions, such as China and Latin America.
While near-term pressures from competitive intensity, tariffs and input costs persist, PG is proactively addressing these through restructuring, supply-chain modernization and targeted portfolio exits to improve agility and returns. Strong cash generation continues to support shareholder returns and reinvestment in innovation, reinforcing PG’s profile as a resilient consumer staples leader with the ability to compound value across cycles.
Conclusion
Procter & Gamble presents a mixed near-term risk-reward profile heading into its fiscal second-quarter results. The company’s defensive business model, strong brand equity and steady organic growth provide downside support, particularly in an uncertain macro environment. However, ongoing margin pressures from commodities and tariffs, coupled with elevated competitive intensity, are likely to limit earnings upside in the near term.
With the stock trading at a premium to the industry and earnings expectations trending modestly lower, investors may prefer a cautious stance. Existing shareholders may consider holding the stock for its stability and long-term fundamentals, while closely monitoring execution on innovation, pricing and productivity initiatives. For new investors, waiting for clearer signs of margin recovery or a more attractive valuation could be prudent. Overall, PG remains a high-quality consumer staples name, but near-term returns may hinge more on cost management and execution than on meaningful growth acceleration.