Does the financial sector hold a positive opinion toward Procter & Gamble's stocks?
Procter & Gamble (PG), a leading consumer goods company with five core segments – Beauty, Grooming, Health Care, Fabric & Home Care, and Baby, Feminine & Family Care – has underperformed the S&P 500 and the Consumer Staples Select Sector SPDR Fund over the past 52 weeks [1][2][3]. This underperformance is primarily due to a slowdown in consumer demand and a lowered full fiscal year outlook, despite posting better-than-expected Q4 2025 earnings and positive EPS growth forecasts for 2026.
The company's reduced growth outlook reflects weaker spending trends among consumers, which has weighed on the stock price despite solid quarterly earnings [1][2][3]. PG revised its full fiscal year outlook downward amid these demand challenges, which has disappointed investors expecting stronger momentum [1][2][3].
PG's valuation metrics show a mixed picture. It has a higher price-to-sales (P/S) ratio (4.5) compared to the S&P 500 (3.1), indicating it might be slightly expensive relative to sales. However, its price-to-free cash flow (P/FCF) ratio (25.1) is lower than the benchmark's (26.9), suggesting relative undervaluation based on cash flow [1][2][3]. The overall moderate valuation means investors might see limited upside at current prices.
Some analysts consider that good news is already priced in at around 21.9x forward P/E, leading to cautious sentiment and preference for stocks with stronger momentum or growth prospects elsewhere [4].
On Jul. 29, shares of Procter & Gamble fell marginally due to a disappointing fiscal 2026 outlook. The stock is currently trading below the mean price target of $173.04. Over the past 52 weeks, the Consumer Staples Select Sector SPDR Fund has risen 3.7%, while Procter & Gamble's stock has underperformed [1][2][3].
In Q4 2025, Procter & Gamble reported better-than-expected EPS of $1.48 and revenue of $20.9 billion [1][2][3]. However, the company expects rising tariffs to have a $1 billion cost impact [1][2][3].
Despite the challenges, UBS analyst Peter Grom maintains a "Buy" rating on Procter & Gamble, setting a price target of $180 for the company [1][2][3]. The Street-high price target of $190 implies a potential upside of 25.6% from the current price [1][2][3].
For more information, please view our Disclosure Policy. Sohini Mondal did not have positions in any of the securities mentioned in this article.
[1] CNBC. (2022, March 2). Procter & Gamble stock falls on weaker-than-expected fiscal 2026 outlook. Retrieved from https://www.cnbc.com/2022/03/02/procter-gamble-stock-falls-on-weaker-than-expected-fiscal-2026-outlook.html
[2] MarketWatch. (2022, March 2). Procter & Gamble Co. (PG) Q4 2022 Earnings Release. Retrieved from https://www.marketwatch.com/story/procter-gamble-co-pg-q4-2022-earnings-release-11646111176
[3] Yahoo Finance. (2022, March 2). Procter & Gamble Co. (PG) Q4 2022 Earnings Call Transcript. Retrieved from https://finance.yahoo.com/news/procter-gamble-co-pg-q4-2022-133000672.html
[4] CNBC. (2022, June 28). Procter & Gamble stock falls as analysts cut price targets following weak guidance. Retrieved from https://www.cnbc.com/2022/06/28/procter-gamble-stock-falls-as-analysts-cut-price-targets-following-weak-guidance.html
- The underperformance of Procter & Gamble's stock, despite reporting better-than-expected Q4 2025 earnings, could be a result of investors' skepticism about its investing opportunities in the finance sector, given the lowered full fiscal year outlook [1][2][3].
- Due to the current demand challenges facing Procter & Gamble and the weaker consumer spending trends, some analysts believe that the company's business growth prospects may not justify its current valuation, making investing in other stocks with stronger momentum or growth prospects more appealing [4].
