At $147.82 the stock trades near 21 times this year's guided core earnings, which assumes growth P&G has not shown. Guidance for flat-to-3% profit growth and a weak first quarter leave a 12-month target of $148.63.
Key points
- 21 times fiscal 2027 core earnings guidance midpoint ($7.00 a share) at $147.82.
- 18.6% June-quarter operating margin, down from 20.8% a year earlier, as reinvestment outran savings.
- $148.63 target, 0.5% above the price, plus a 2.9% dividend yield.
The call
The price requires a return to normal growth. At about 21 times core EPS (earnings excluding one-off items), the market pays for a premium staple that grows sales 3% and profit mid-single digits. Guidance is 1% to 3% sales growth and 0% to 3% EPS growth.
Quarterly revenue ($ billions) and operating margin (%)- Revenue ($B)
- Operating margin (%)
Source: SEC XBRL company facts via desk fact table, quarters to June 2026
I believe the stock tracks the market's pace of earnings, not more. Revenue has barely moved in two years while margins fell. Management warned first-quarter EPS may fall 5% or more. Savings from job cuts should help later, but promotions and input costs absorb them.
Valuation
| Item | Figure |
|---|
| Fiscal 2027 core EPS guidance midpoint | $7.00 a share |
| My fiscal 2028 core EPS, the year the stock is priced on in October 2027 | $7.25 a share |
| Multiple on that EPS | 20.5 times |
| 12-month target | $148.63 a share |
| Dividend yield on top | 2.9% |
I use 20.5 times, a little below today's 21, because growth is slower than the premium multiple implies and the dollar and oil costs are headwinds. Upside needs a re-rating to 22 times, about $159, which needs visible share gains. Downside at 19 times is about $138. The two sides are roughly balanced, so the call is a hold, a forecast that the stock tracks the market less its dividend.
Risks
- Further promotions in diapers, family care and hair care cut volume or margin; watch the October 22 first-quarter report for organic sales below 1%.
- Oil near $90 a barrel, resin, pulp and palm oil costs squeeze margins; watch gross margin and the monthly price indexes.
- The $3.8 billion Thorne deal adds debt, now $34.1 billion in total, and integration risk; watch closing and any change to guidance.
What would change my mind
Two straight quarters of organic sales growth above 3% with share gains would move me to buy; a first-half cut to guidance would move me to sell.