Procter & Gamble Earnings: Sales Slowdown Spooks Investors, but Shares Still Strike Us as Rich

The market dogged Procter & Gamble after it closed the book on its second consecutive quarter of tepid sales performance, up just 2% on an organic basis in its fiscal fourth quarter (versus 3% growth in the prior quarter and the mid- to high-single-digit percentage jumps that have more recently characterized the business), with shares down around 5%-6% in intraday trading. However, we had expected its sales growth would slow. Indeed, its fiscal 2024 results and fiscal 2025 guidance for 3%-5% organic sales growth against 5%-7% EPS growth generally square with our preprint estimates, rendering our $143 per share fair value estimate largely unchanged (beyond time value). Although we still don’t view the stock as a bargain, trading at a 10%-15% premium to our intrinsic valuation, we think investors should keep this wide-moat name on their radar to the extent that trepidation around intensifying competition and a waning macro landscape offer a more attractive entry point.