Procter & Gamble Earnings: Macro Volatility Caps Sales and Profits

Key Morningstar Metrics for Procter & Gamble

• Fair Value Estimate: $143
• Morningstar Rating: ★★
• Morningstar Economic Moat Rating: Wide
• Morningstar Uncertainty Rating: Low

What We Thought of Procter & Gamble’s Earnings

Procter & Gamble’s PG fiscal third-quarter organic sales ticked up a mere 1% on price hikes. The adjusted gross margin slumped 30 basis points to 51%, as productivity savings and stepped-up prices were offset by unfavorable mix, inflation, and reinvestment in the business.

Why it matters: While P&G isn’t immune to challenges resulting from weak consumer spending and the impending hit from higher tariffs, we’re encouraged that investments behind consumer-valued innovation and marketing, which we forecast at 13% of sales long term, remain a priority.

• Unlike in past recessionary cycles, P&G is launching products across price tiers. We posit that this stymies private-label’s advancement; shares of this lower-priced fare are down in its large developed markets (qualitatively referenced).
• With just three months left in its fiscal year, management tempered its guidance to 2% organic sales growth (from 3%-5%) and $6.72-$6.82 in adjusted EPS ($6.91-$7.05). Shares slipped around 5% on the print and updated forecast.

The bottom line: We intend to tweak our near-term expectations in line with the wide-moat firm’s revised outlook, resulting in a low-single-digit reduction to our $143 per share fair value estimate.

• Even after the rout, we view the stock as heated, trading at more than a 10% premium to our intrinsic valuation. If the selloff persists, we’d recommend this competitively advantaged name.

Coming up: In fiscal 2026, P&G sees $1 billion-$1.5 billion in added costs from tariffs (3% of cost of goods sold, assuming no change in levies). The largest drivers are China (which accounts for about 10% of its total US imports) and Canada (as a portion of its finished products are manufactured in the US).