Should You Buy Procter & Gamble Stock?

Procter & Gamble (NYSE:PG) recently increased its quarterly dividend to $1.0568 per share, up from $1.0065. Despite this, PG’s stock has underperformed the broader S&P 500 year-to-date, falling 5% while the index gained 7%. This dip is largely due to the company lowering its full fiscal year outlook (which ends in June) amid a slowdown in consumer demand. Despite these challenges, we believe PG stock has potential for upside. While there are minor concerns, its current valuation appears moderate. Our positive outlook is based on a comprehensive comparison of PG’s current valuation against its recent operating performance and its historical and current financial health.

Our detailed analysis of Procter & Gamble, focusing on Growth, Profitability, Financial Stability, and Downturn Resilience, indicates the company maintains strong operating performance and a robust financial condition. That said, if you seek upside with lower volatility than individual stocks, the Trefis High Quality portfolio presents an alternative — having outperformed the S&P 500 and generated returns exceeding 91% since its inception. Separately, see – ProKidney: What’s Happening With PROK Stock?

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How Does Procter & Gamble’s Valuation Look vs. The S&P 500?

Going by what you pay per dollar of sales or profit, PG stock looks slightly expensive compared to the broader market.

• Procter & Gamble has a price-to-sales (P/S) ratio of 4.5 vs. a figure of 3.1 for the S&P 500
• Additionally, the company’s price-to-free cash flow (P/FCF) ratio is 25.1 compared to 20.9 for S&P 500
• And, it has a price-to-earnings (P/E) ratio of 24.3 vs. the benchmark’s 26.9

How Have Procter & Gamble’s Revenues Grown Over Recent Years?

Procter & Gamble’s Revenues have declined marginally over recent years.

• Procter & Gamble has seen its top line grow at an average rate of 1.8% over the last 3 years (vs. increase of 5.5% for S&P 500)
• Its revenues have declined 0.2% from $84 Bil to $84 Bil in the last 12 months (vs. growth of 5.5% for S&P 500)
• Also, its quarterly revenues fell 2.1% to $20 Bil in the most recent quarter from $20 Bil a year ago (vs. 4.8% improvement for S&P 500)

How Profitable Is Procter & Gamble?

Procter & Gamble’s profit margins are around the median level for companies in the Trefis coverage universe.

• Procter & Gamble’s Operating Income over the last four quarters was $20 Bil, which represents a moderate Operating Margin of 23.8%
• Procter & Gamble’s Operating Cash Flow (OCF) over this period was $19 Bil, pointing to a moderate OCF Margin of 22.1% (vs. 14.9% for S&P 500)
• For the last four-quarter period, Procter & Gamble’s Net Income was $15 Bil — indicating a high Net Income Margin of 18.5% (vs. 11.6% for S&P 500)

Does Procter & Gamble Look Financially Stable?

Procter & Gamble’s balance sheet looks strong.

• Procter & Gamble’s Debt figure was $34 Bil at the end of the most recent quarter, while its market capitalization is $370 Bil (as of 7/9/2025). This implies a strong Debt-to-Equity Ratio of 9.1% (vs. 19.4% for S&P 500). [Note: A low Debt-to-Equity Ratio is desirable]
• Cash (including cash equivalents) makes up $9.1 Bil of the $123 Bil in Total Assets for Procter & Gamble.  This yields a moderate Cash-to-Assets Ratio of 7.4%

How Resilient Is PG Stock During A Downturn?

PG stock has seen an impact that was slightly better than the benchmark S&P 500 index during some of the recent downturns. Worried about the impact of a market crash on PG stock? Our dashboard How Low Can Procter & Gamble Stock Go In A Market Crash? has a detailed analysis of how the stock performed during and after previous market crashes.

Inflation Shock (2022)

• PG stock fell 24.3% from a high of $163.41 on 28 April 2022 to $123.76 on 10 October 2022, vs. a peak-to-trough decline of 25.4% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 2 May 2024
• Since then, the stock has increased to a high of $179.70 on 2 December 2024 and currently trades at around $160

COVID-19 Pandemic (2020)

• PG stock fell 23.2% from a high of $127.14 on 6 February 2020 to $97.70 on 23 March 2020, vs. a peak-to-trough decline of 33.9% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 28 July 2020

Global Financial Crisis (2008)

• PG stock fell 40.8% from a high of $74.67 on 12 December 2007 to $44.18 on 9 March 2009, vs. a peak-to-trough decline of 56.8% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 29 January 2013

Putting All The Pieces Together: What It Means For PG Stock

In summary, Procter & Gamble’s performance across the parameters detailed above are as follows:

• Growth: Weak
• Profitability: Neutral
• Financial Stability: Strong
• Downturn Resilience: Very Strong
  
• Overall: Strong

Overall, Procter & Gamble has demonstrated strong performance across the key parameters we’ve examined. While the stock might appear modestly expensive when compared to the broader market index, it’s currently trading slightly below its historical average Price-to-Sales (P/S) ratio of approximately 4.7 times trailing revenues.

We believe P&G stock has further upside potential. In fact, we estimate Procter & Gamble’s valuation to be $182 per share, indicating a 15% upside from its current level.

However, it’s important to acknowledge potential risks. Our assessment could be incorrect, and investors might be hesitant to assign a higher valuation to P&G given its recent decline in sales. Investors should carefully consider the risks associated with falling sales and moderate profitability when making investment decisions regarding P&G stock. See, there always remains a meaningful risk when investing in a single, or just a handful, of stocks. Consider Trefis High Quality (HQ) Portfolio which, with a collection of 30 stocks, has a track record of comfortably outperforming the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.

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