Procter & Gamble Stock Is Up 11% This Year. Is It Still a Buy Ahead of Earnings?

Procter & Gamble is set to release its fiscal first-quarter 2026/2027 earnings report on Oct. 22. Here’s Morningstar’s take on what to look for in Procter & Gamble’s earnings and the outlook for its stock.

Key Morningstar Metrics for Procter & Gamble

• Fair Value Estimate
  : $155.00
• Morningstar Rating
  : ★★★
• Morningstar Economic Moat Rating
  : Wide
• Morningstar Uncertainty Rating
  : Low

Procter & Gamble Earnings Release Date

• Thursday, Oct. 22, 2026, before the start of trading

What to Watch for in Procter & Gamble’s Earnings

• Volumes have been a concern across the industry, and we’ll be looking to hear whether that has persisted. If so, to what extent has this spurred increased promotional spending and/or led to stepped-up trading down to lower-priced private-label offerings?
• On a more granular level, how are the company’s efforts to improve its value proposition in its largest market, North America, trending? And have recent share gains in China (which we estimate at a high-single-digit percentage of sales) held?
• In addition, some consumer product companies have recently highlighted the step-up in inflation, particularly around transportation and logistics—a byproduct of the Middle East conflict. Are additional cost-saving or price-raising actions necessary to blunt any potential hit to margins?
• We expect earnings commentary may be more limited in other quarters, since the firm is hosting an investor event next month.
• Procter & Gamble shares are currently fairly valued. But if the stock trades down on concerns around the macro and/or competitive landscape, we’d look to recommend that investors add this wide-moat name to their shopping list.

The following are excerpts from Morningstar’s company report on Procter & Gamble stock.

Fair Value Estimate for Procter & Gamble Stock

With its 3-star rating, we believe Procter & Gamble’s stock is fairly valued compared with our long-term fair value estimate of $155 per share. Incorporated into its fiscal 2027 outlook (1%-3% organic sales growth and $6.89-$7.11 in adjusted earnings per share), P&G expects a $1 billion inflation headwind (primarily from oil-based derivatives). Even though most of its manufacturing is already close to the end consumer, we expect P&G to use multiple levers in the near term to mitigate this pressure, including identifying and eliminating inefficiencies, investing in margin-accretive innovations, and selectively raising prices. Against this backdrop, our long-term outlook remains for about 4% annual sales growth and nearly 25% operating margins at the end of our explicit forecast, up from an average of 23%-24% over the past five years. Our valuation implies a fiscal 2027 enterprise value/adjusted EBITDA of 15 times.

Read more about Procter & Gamble’s fair value estimate.

Economic Moat Rating

We assign Procter & Gamble a wide moat based on its strong intangible assets, which have also enabled a cost advantage.

P&G operates as a leading household and personal care manufacturer, with around a 35% share of the global laundry care category, almost 60% of the domestic menstrual care space, around 20% of dishwashing worldwide, and more than one-fifth of the North American men’s grooming market, according to Euromonitor. It has the resources to launch consumer-valued new products (spending 2%-3% of sales, or around $2 billion, on research and development annually) and market them (a low-double-digit percentage of sales, or $9 billion-$10 billion annually) to drive customer traffic into stores and onto e-commerce platforms.

Even as the retail landscape has consolidated, which theoretically affords retailers greater bargaining power, leading brands like P&G’s still drive traffic into retail outlets. Combined with its proven ability to keep retail shelves stocked, we believe P&G has solidified its position with retail partners, bolstering the advantage stemming from its intangible assets.

Further, P&G has amassed significant scale, enabling lower unit costs than its smaller peers. This has manifested in returns on invested capital (including goodwill) that have averaged nearly 17% annually over the past 10 years, exceeding our 7% cost of capital estimate. We think the firm can continue to outearn its cost of capital for the next 20 years, supporting our wide moat rating.

Read more about Procter & Gamble’s economic moat.

Financial Strength

P&G maintains solid financial health. The firm continues to generate significant cash, with free cash flow exceeding $15 billion in fiscal 2026 (about 18% of sales). We expect P&G to remain committed to returning excess cash to shareholders. As such, we forecast that it will increase its dividend at a high-single-digit pace, implying an average annual payout ratio of around 70%. We also expect P&G to repurchase a low-single-digit percentage of shares outstanding each year, which we view as prudent when the stock trades at a discount to our intrinsic value.

After management went to great lengths to slim down over the past decade, we doubt it has much appetite for a transformational deal. We suspect that P&G would ultimately favor bringing smaller, niche operators into the fold (which should not alter the financial prospects of the business or our valuation) as a means by which to enhance its category and/or geographic positioning, in line with recent additions to its mix (which have included Farmacy Beauty, Ouai, and Mielle Organics). At just a low-single-digit percentage of sales, these targets seem to align with an intent to selectively expand its reach in attractive categories and geographies, rather than significantly boosting its top-line prospects. We think P&G’s primary focus for potential mergers and acquisitions will be the fragmented personal healthcare space and the specialty beauty sector.

Read more about Procter & Gamble’s financial strength.

Risk and Uncertainty

We assign P&G a Low Uncertainty Rating. Across the sector, consternation has surrounded the competitive landscape and firms’ ability to offset inflation in raw materials, labor, packaging, and transportation with higher prices. From an environmental, social, and governance perspective, product recalls or allegations of price-fixing could also weigh on volume. More recently, tariffs and the conflict in the Middle East have caused considerable uncertainty. However, we don’t see any of these factors impairing the company’s brand standing or cash flows.

With about 50% of its sales outside the US, P&G is exposed to foreign-exchange rate movements, which could constrain its reported financials and have a more pronounced profit impact, as the firm doesn’t always manufacture where it sells. This challenge is unlikely to abate fully.

P&G has faced executional missteps in the past, which led to overextension as it sought to expand its category and geographic footprint. But we think it’s been charting a new course by reducing headcount and overhead, improving manufacturing efficiency, and freeing up funds to reinvest in its business.

Read more about Procter & Gamble’s risk and uncertainty.

PG Bulls Say

• P&G is again gaining share in China (which we estimate at a high-single-digit percentage of sales). If these gains persist, sales could outpace our expectations.
• Opportunities to rationalize its product mix could enable P&G to more effectively direct brand spending to the highest-return aisles.
• Additional savings (which could stem from reduced overhead and higher returns on its manufacturing footprint and marketing investments) may materialize if efficiency is as ingrained in its culture as management suggests.

PG Bears Say

• North America remains in the doldrums, and competitive and macro headwinds on its home turf could eventually dilute its brand standing.
• In fiscal 2027, P&G expects a $1 billion headwind from inflation (primarily from oil-based derivatives), which may dent profits if it can’t extract efficiencies and/or raise prices.
• Foreign exchange volatility may hamper profits from time to time, as a portion of P&G’s products are sold in different geographic regions.

This article was compiled by Lauren Solberg.