PG Procter & Gamble
Wonderful, wide-moat brand compounder, but 5.5% growth can't clear the ~8% the price already assumes.
The business
P&G sells branded household staples—Tide, Pampers, Gillette, Crest, Charmin, Olay—purchased repeatedly and habitually by billions of consumers globally, monetized through retail and e-commerce distribution with a portfolio skewed toward premium, higher-margin categories.
Quality gate · 89/100
Moat & management
| Moat | wide moat |
| Source | brand |
| Trajectory | stable |
| Management | excellent |
Decades of R&D-backed product superiority, scale in advertising/distribution, and entrenched shelf position across categories where private label has struggled to dislodge trusted staples; 50%+ gross margins and 19% median ROIC evidence pricing power that has persisted through cycles.
Consistent buybacks (share count down ~0.7%/yr) funded by strong FCF conversion (0.96), disciplined balance sheet (net debt/EBITDA ~1.0x), and portfolio pruning toward higher-margin categories rather than empire-building M&A.
Owner-earnings inputs
| Owner earnings (TTM) | 15.03B |
| Owner-earnings yield | 4.5% |
| Free-cash-flow yield | 4.5% |
| Growth used (normalized) | 5.5% |
| Market-implied growth (reverse DCF) | 8.0% |
| Terminal growth | 3.0% |
| Discount rate (hurdle) | 9.2% |
Projected owner earnings
| Yr | Owner earnings | Growth | PV |
|---|---|---|---|
| 1 | 15.85B | 5.5% | 14.52B |
| 2 | 16.70B | 5.3% | 14.01B |
| 3 | 17.56B | 5.1% | 13.50B |
| 4 | 18.43B | 5.0% | 12.98B |
| 5 | 19.31B | 4.8% | 12.46B |
| 6 | 20.20B | 4.6% | 11.94B |
| 7 | 21.09B | 4.4% | 11.42B |
| 8 | 21.99B | 4.2% | 10.91B |
| 9 | 22.89B | 4.1% | 10.40B |
| 10 | 23.78B | 3.9% | 9.89B |
| 11 | 24.66B | 3.7% | 9.40B |
| 12 | 25.53B | 3.5% | 8.92B |
| 13 | 26.39B | 3.4% | 8.44B |
| 14 | 27.23B | 3.2% | 7.98B |
| 15 | 28.05B | 3.0% | 7.53B |
Key risks
- Slowing organic volume growth in mature developed markets with input-cost/tariff pressure (the flagged $1B cost hit)
- Private-label and value-brand share gains during periods of consumer trade-down
- Slower emerging-market growth than historically assumed, given China softness
Catalysts
- Continued premiumization and innovation-led pricing across core categories
- Further portfolio simplification toward higher-growth, higher-margin SKUs
- Productivity/cost savings programs offsetting commodity and tariff inflation
Recent news
score · 8 articles
- Why e.l.f. & Estée Lauder benefit from inflation
- P&G Stock Falls 1.8% as $1 Billion Cost Hit Looms
- Publicis Is Winning the AI Advertising Race, and Its Stock Still Looks Cheap
- Procter & Gamble's Fiscal 2027 Guidance Reflects Prudent View of Market Realities, RBC Says
- PG Q4 Earnings Call Highlights Consumer Growth Reset
- HSBC downgrades Procter & Gamble to Hold as reinvestment weighs on growth outlook
- Humana upgraded, Las Vegas Sands downgraded: Wall Street's top analyst calls
- This Dividend King Still Has Plenty of Room to Grow
⚠ maintenance capex ≈ min(capex, D&A), capped at FCF · Price pays for ~8%/yr owner-earnings growth over 15y (reverse DCF); model credits 6%. · Rich vs our conservative value, but a quality business is not a short — stance is WAIT for a better price, not sell.