- Company name
- Procter & Gamble
- Sector
- Consumer packaged goods
- About
- Procter & Gamble makes household and personal care products. Its brands include Tide, Pampers, Gillette, and Crest. Retailers around the world sell these products to consumers every day. The company earns money through steady, repeat purchases of everyday items.
- Thesis
- Investors doubt that P&G can grow its profit while its costs rise. In fiscal 2026, all of the 1% organic sales growth came from higher prices, and volume was flat. In the first quarter of fiscal 2027, organic sales grew 4% and volume grew about 2%, but core EPS grew only 1%. Higher costs for commodities, energy and transport cut the gross margin by 1.5 points, and P&G now expects about $1.4 billion after tax of these costs in fiscal 2027, up from about $1 billion. The company is also cutting about 7,000 jobs and dropping weak brands, and these one-time costs hide part of its earnings power. For the gap to close, volume must keep growing without price cuts that reduce the margin. Productivity savings must offset the higher costs, so that the margin stops falling. The restructuring costs must end inside the plan, and core EPS must stay in the $6.89 to $7.11 range for fiscal 2027. Thorne, which P&G bought on October 1, 2026, must add growth without a large cost. The next test is the fiscal second-quarter report, expected in January 2027, and the restructuring plan ends in mid-2027. If volume keeps growing and the margin recovers over the next two to three quarters, the gap can close. If costs keep rising faster than savings, the discount can last into 2027.
- Risks
- In fiscal 2026, all of the organic sales growth came from price, and volume was flat. Volume grew about 2% in the first quarter of fiscal 2027, but one quarter does not show a lasting change. Consumer demand is weak and promotions are heavy. If P&G must cut prices to sell more units, its margin falls.
Fiscal 2027 guidance now includes about $0.79 per share of cost headwinds, up from about $0.56 in July 2026: about $1.4 billion after tax from commodities, energy and transport, $300 million from higher net interest, $150 million from lower non-operating income and $50 million from currency. If these costs increase more, core 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. The plan costs $1.0 to $1.6 billion before tax over fiscal 2026 and 2027, and more than half came in fiscal 2026. New charges or a longer plan would cut earnings again.
Tariff changes are a risk outside the fiscal 2027 guidance. The $3.9 billion Thorne purchase can also fail to give the growth that P&G expects.
- Balance sheet
- Cash: $15.4B
Debt: $38.9B
Net debt: $23.5B
EBITDA, last 12 months: $23.0B
Net debt / EBITDA: 1.0× (low)
Interest cover: 22×
Undrawn credit line: $8.0B
Debt due within 12 months: $17.0B
Ratings: Moody's Aa3 (positive 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 most of the cash it makes. At September 30, 2026, debt was $38.9 billion, up from $34.1 billion at June 30, 2026, mainly because P&G added commercial paper to pay for Thorne. Debt due within one year was $17.0 billion, with $6.6 billion of long-term debt that becomes due and commercial paper for the rest. Long-term debt was $21.9 billion. Cash was $15.4 billion, because P&G paid the $3.9 billion for Thorne on October 1, 2026, the day after the quarter ended. EBITDA is operating income plus depreciation and amortization for the 12 months to September 30, 2026. Interest cover is operating income over interest expense for the same period. The 10-K for fiscal 2026 lists $3.2 billion of undrawn bank facilities until October 2030 and $4.8 billion for 364 days until October 2026. They support the commercial paper program. The 10-Q does not say if P&G renewed the 364-day facility. 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 the first quarter of fiscal 2027, operating cash flow was $5.8 billion. P&G paid $2.6 billion of dividends and spent $1.3 billion on buybacks. The fiscal 2027 plan is more than $10 billion of dividends and about $5 billion of buybacks. On October 26, 2026, P&G sold $4.0 billion of notes due from 2031 to 2056. The pricing term sheet lists Moody's Aa3 with a positive outlook and S&P AA- with a stable outlook.
As of Sep 30, 2026.
- Checkpoints
- Oct 1, 2026: Thorne purchase closes. Passed. Watch: The $3.8 billion purchase closes between October and December 2026 with no large change to the terms passes; a block by regulators or a long delay fails. Outcome: P&G completed the purchase on October 1, 2026, for $3.9 billion in cash.
Oct 22, 2026: Fiscal Q1 2027 earnings: volume, costs and guidance. Passed. Watch: Flat or positive organic volume, a core EPS decline no worse than the 5% or more that P&G guided, and an unchanged $6.89 to $7.11 fiscal 2027 range pass; a guidance cut or a volume decline fails. Outcome: Organic volume grew about 2%, core EPS rose 1% instead of the guided fall of 5% or more, and P&G kept the $6.89 to $7.11 range.
Jan 22, 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 a 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
- Oct 26, 2026: P&G sold $4.0 billion of US dollar notes due from 2031 to 2056, at rates from 5.125% to 5.900%. It closed the sale on October 30. On November 3, it closed a sale of €3.25 billion of euro notes due from 2030 to 2046, at rates from 3.750% to 4.625%.
Oct 22, 2026: P&G reported fiscal first-quarter 2027 results. Net sales rose 4% to $23.3 billion, and organic sales also rose 4%, with about 2% from volume and 1% from mix. Core EPS rose 1% to $2.00, against the guidance of a fall of 5% or more. Core gross margin fell 1.5 points, mostly because of higher commodity costs and product investments. P&G kept its fiscal 2027 guidance of 1% to 3% organic sales growth and core EPS of $6.89 to $7.11, and raised its all-in sales growth guidance to 2% to 4% because of Thorne. It now expects about $1.4 billion after tax of commodity, energy and transport cost headwinds, up from about $1 billion.
Oct 13, 2026: At the annual meeting, shareholders elected all 12 director nominees and voted against three shareholder proposals, per preliminary results. The board declared a quarterly dividend of $1.0885 per share, payable on or after November 16, 2026.
Oct 1, 2026: P&G completed its purchase of Thorne for $3.9 billion in cash. Thorne is part of the Personal Health Care business.
Sep 24, 2026: P&G confirmed that it will discuss its fiscal first-quarter 2027 results on October 22, 2026.
Aug 4, 2026: 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.
Jul 29, 2026: P&G reported fiscal 2026 results. Net sales were $87.0 billion, organic sales grew 1%, and core EPS 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.
Jul 29, 2026: 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.
Apr 14, 2026: P&G raised its quarterly dividend by 3% to $1.0885 per share. This is its 70th annual dividend increase in a row.
Jun 5, 2025: P&G announced a two-year restructuring plan to cut about 7,000 non-manufacturing jobs, about 6% of its total workforce, and to exit some brands and categories.