Is Procter & Gamble Stock Priced Right Against Its Peers?
Procter & Gamble (PG) operates with a wider operating margin than its four rivals in household and personal care: Colgate-Palmolive, Church & Dwight, Estee Lauder and Kenvue. Over the past year, however, P&G stock returned the least of the five. Investors currently pay less for its earnings than they do for Church & Dwight’s. So how much less are you paying, and for how much more profit?
Lower P/E Than Church & Dwight Despite Better Profitability
P&G stock currently trades at 22.2 times its earnings over the past twelve months, compared with 31.8 times for Church & Dwight. Profitability metrics highlight a different balance. P&G had an operating margin of 22.7% over the same period, well above the 17.5% recorded for Church & Dwight. The two companies belong to different industry classifications, so what each sells may account for part of that margin gap. P&G also delivered faster top-line expansion, with revenue up 3.3% against 2.7% for Church & Dwight.
Colgate-Palmolive and Estee Lauder each recorded a loss in at least one of the past four quarters, so their P/Es do not provide a direct comparison with P&G’s. Among the peers, only Kenvue carries a lower P/E at 20.6 times earnings, and that company saw its revenue grow more slowly at 1.8%.
| PG | CL | CHD | EL | KVUE | |
|---|---|---|---|---|---|
| Market Cap ($ Bil) | 356.4 | 71.9 | 23.7 | 36.2 | 34.1 |
| PE Ratio (LTM) | 22.2 | 35.3 | 31.8 | 199.0 | 20.6 |
| LTM Revenue Growth | 3.3% | 5.2% | 2.7% | 5.0% | 1.8% |
| LTM Operating Margin | 22.7% | 19.3% | 17.5% | 11.1% | 19.1% |
| 12M Stock Return | 5.2% | 18.3% | 15.7% | 15.4% | 13.1% |
Is P&G’s Business Slowing?
P&G is keeping a smaller portion of its sales as profit. The company posted an operating margin of 24% a year earlier, compared with 22.7% over the past twelve months.
In the latest quarter, revenue grew 1.5% from a year earlier. Management noted that market growth across North America and its main European markets has slowed by 1 to 2 points over the past 12 to 18 months.
Management is currently betting on better products to restart growth. Tide Original Liquid went from declining sales to high-single-digit growth after P&G improved the detergent without raising the price. Tide Evo, a new formula that P&G has patented, is set to roll out nationally in fiscal 2027.
What Does P&G Expect For Fiscal 2027?
Management expects organic sales to grow 1% to 3% in fiscal 2027, matching the expansion range it anticipates for its markets. Executives forecast core earnings per share of $6.89 to $7.11, compared with $6.89 in fiscal 2026. Hitting the low end of that guidance means no growth at all.
Earnings per share in fiscal Q1 2027 would fall 5% or more from a year earlier because of higher costs, according to management. That quarter has already ended, but P&G has not yet reported its results. The forecasts provided for fiscal 2027 leave out any significant further currency weakness, higher commodity costs or new tariffs.
The current P/E, which sits lower than Church & Dwight’s, appears to assume that P&G will see its margin keep narrowing and its sales growth stay slow. So far, a narrower margin and a core earnings forecast that starts at no growth fit that worry, though Tide Original Liquid has turned around.
How To Act On PG?
Now you know PG better. And that’s our purpose: to make you informed before you invest your money. However, making a bet on a single stock carries its own risks.
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