- Thesis
- Procter & Gamble growsInvestors see a company that sells no more units than a year ago. In fiscal 2026, all of the 1% organic sales mainly throughgrowth came from higher prices, not more units soldand volume was flat. Investors worry that shoppers will keep switchingWeak consumer demand and heavy promotions make further price increases difficult. Higher costs for commodities, energy and transport also cut fiscal 2027 earnings, and P&G expects first-quarter core EPS to store brands as prices keep risingfall 5% or more. The company is also cutting about 7,000 jobs and dropping weak brands over a two-year plan. This plan adds, and these one-time costs that hide today's truepart of its earnings power. For the gap to close, unit volume must stop falling while these one-timegrow again without new price cuts that reduce the margin. The restructuring costs must also end inside the plan, and core EPS must stay in the $6. Price increases89 to $7.11 range for fiscal 2027. The Thorne supplements purchase must also keep workingadd growth without pushing more shoppers toward store brandsa large cost. The board named CEO Shailesh Jejurikar as chairman too, giving him full control over the turnaround. The nextfirst test comes at fiscal first-quarter earnings on October 22, 2026. The, and the restructuring plan itself runs throughends in mid-2027. If volume recovers andover the extra costs end on schedulenext two to four quarters, the gap couldcan close within a few quarters. If store-brand switching keeps growingvolume stays flat and costs stay high, the discount couldcan last into 2027.
- Risks
- Almost all ofIn fiscal 2026, all of the organic sales growth came from price and mix, not from sellingand volume was flat. Consumer demand is weak and promotions are heavy. If P&G must cut prices to sell more units, its margin falls.
Fiscal 2027 guidance includes about $0.56 per share of cost headwinds: about $1 billion after tax from commodities, energy and transport, and smaller amounts from interest, non-operating income and currency. If these costs increase more shoppers trade down to store brands, further price increases may stop translating into sales growthcore EPS can fall below the guidance range.
P&G is in the middle of a two-year restructuring plan to cut about 7,000 jobs and exit weaker brands, carrying up. The plan costs $1.0 to $1.6 billion in charges through mid-before tax over fiscal 2026 and 2027, and more than half came in fiscal 2026. TheseNew charges are already cutting reportedor a longer plan would cut earnings per shareagain.
Tariffs still raise P&G's costs. The company expects several hundred million dollars in tariff costs, andTariff changes are a risk outside the fiscal 2027 guidance already includes a per-share cost from tariffs, commodities, and currency swings. A change in trade policy could push these costs higherThe $3.8 billion Thorne purchase can also fail to give the growth that P&G expects.
- Balance sheet
- Cash: $9.9B
Debt: $34.1B
Net debt: $24.2B
EBITDA, last 12 months: $22.9B
Net debt / EBITDA: 1.1× (low)
Interest cover: 22×
Undrawn credit line: $8.0B
Debt due within 12 months: $11.3B
Ratings: Moody's Aa3 (stable outlook), S&P AA- (stable outlook)
Procter & Gamble funds itself with cash from operations and with unsecured debt that the parent company issues. The strong rating keeps borrowing easy, and dividends and buybacks use about all of the cash it makes. At June 30, 2026, the debt due within one year included $6.5 billion of long-term debt that becomes due and $4.8 billion of commercial paper. Long-term debt was $22.8 billion was long-term notes in US dollars and euros, at ana weighted average rate of 3.3% after interest rate swaps. EBITDA is fiscal 2026 operating income plus depreciation and amortization. The undrawn bank facility supportsfacilities support the commercial paper program: $3.2 billion until October 2030 and $4.8 billion for 364 days until October 2026. Current liabilities were $12.5 billion more than current assets. This is normal for P&G, because it pays maturing short-term debt with new commercial paper. In fiscal 2026, P&G paid $10.2 billion in dividends and spent $5.0 billion on buybacks. This used about all of its $15.8 billion adjusted free cash flow. The fiscal 2027 plan is about $10 billion in dividends and $5 billion in buybacks, slightly more than the cash it expects to make. ThusP&G will also pay $3.8 billion in cash for Thorne, with closing expected between October and December 2026. If debt stayspays for all of it, gross debt increases to about flat or rises a little$38 billion.
As of 2026-06-30.
- Checkpoints
- Oct 22, 2026: Fiscal Q1 2027 earnings: volume and restructuring, costs and guidance. Pending. Watch: Flat or positive organic volume and, a core EPS on track fordecline no worse than the 5% or more that P&G guided, and an unchanged $6.89 to $7.11 fiscal 2027 range pass; a newguidance cut or a volume decline fails.
Dec 2026 (estimate): Thorne purchase closes. Pending. Watch: The $3.8 billion purchase closes between October and December 2026 with growth only from priceno large change to the terms passes; a block by regulators or a long delay fails.
Jan 2027 (estimate): Fiscal Q2 2027 earnings: holiday-quarter volume and guidance. Pending. Watch: Organic sales growth inside the 1% to 3% guidance with volume holding up passes; a guidance cut or more trading down to store brandsa new fall in volume fails.
Jul 2027 (estimate): Fiscal 2027 results: restructuring plan ends. Pending. Watch: Restructuring charges that stop inside the $1.0 to $1.6 billion plan and a higher core operating margin pass; new charges or a longer plan fail.
- Recent events
- 2026-09-24: P&G confirmed that it will discuss its fiscal first-quarter 2027 results on October 22, 2026.
2026-08-04: P&G agreed to buy Thorne, a maker of premium vitamins and supplements, for $3.8 billion in cash. Thorne will join the Health Care segment. P&G expects the purchase to close between October and December 2026, after regulatory approvals.
2026-07-29: P&G reported fiscal 2026 results. Full-yearNet sales were $87.0 billion, organic sales grew 1%, and full-year core earnings per shareEPS was $6.89. All of the organic growth came from price, and volume was flat. For fiscal 2027, P&G guided organic sales growth of 1% to 3% and core EPS of $6.89 to $7.11, and it expects first-quarter core EPS to fall 5% or more.
2026-07-29: P&G's board named CEO Shailesh Jejurikar as Chairman, effective August 1, 2026. He succeeds Jon Moeller, who retired from the board on July 31, 2026, and from the company on August 14, 2026.
2026-04-14: P&G raised its quarterly dividend by 3% to $1.0885 per share. This is its 70th annual dividend increase in a row.
2025-06-05: P&G announced a two-year restructuring plan to cut about 7,000 non-manufacturing jobs, roughlyabout 6% of its total workforce, and to prune weakerexit some brands and categories.