Procter & Gamble Q1’25 Earnings Preview
Procter & Gamble (NYSE: PG) is scheduled to report its fiscal Q1 2025 results on Friday, October 18 (P&G’s fiscal ends in June). We expect the company to post upbeat results, with revenue of $22.1 billion and earnings of $1.92 per share, compared to the consensus estimates of $21.96 billion and $1.90, respectively. While the company’s top-line is expected to see low single-digit growth, its bottom line will likely see a rise in the mid-single-digits, owing to the impact of restructuring charges. Our interactive dashboard analysis of Procter & Gamble’s FY 2025Q1 Earnings Preview has more details on how the company’s revenues and earnings will likely trend for the quarter.
What Trends Will Drive P&G’s Q1 Results?
P&G should see slight growth in sales on the back of modest volume gains. Its grooming business has done relatively better than others lately, a trend likely to continue in Q1 as well. Grooming will likely continue to see pricing gains, while Baby Care sales may trend lower amid continued decline in market share.
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The company is undergoing market portfolio restructuring, which is expected to impact the overall margin profile. P&G expects to record a charge of $750 million for accumulated currency translation losses in Q1. Still, its core earnings per share are expected to see a growth higher than its sales, driven by lower shares outstanding. P&G plans to spend $6 billion to $7 billion on share repurchases in fiscal 2025.
How Did P&G Perform In The Previous Quarter?
Procter & Gamble’s revenues were flat y-o-y at $20.5 billion in Q4’24, as 1% pricing gains and 1% volume gains were offset by a 2% unfavorable foreign exchange impact. Looking at segments, Grooming saw 7% organic sales growth, while Health Care was up 4%, Beauty up 3%, and Fabric & Home Care up 2%. Baby, Feminine & Family Care saw a 1% decline in sales on an organic basis. On the margin front, the company reported a 100 bps decline in core operating margin to 19.3% in Q4, primarily reflecting the impact of currency translation charge and higher SG&A expenses. Despite a flat revenue and margin contraction, P&G reported a slight gain in the bottom line at $1.40, versus $1.37 in the prior-year quarter, due to a 0.5% decline in total shares outstanding.
What Does This Mean For PG Stock?
PG stock is up 20% so far this year, broadly aligning with the gains for the S&P 500 index. Notably, the annual returns for PG stock over the recent years were considerably less volatile than the S&P 500. Similarly, the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, is less volatile. But, it has outperformed the S&P 500 each year over the same 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.
We estimate Procter & Gamble’s Valuation to be $170 per share, close to its current market price. Our forecast is based on a 24x P/E multiple for PG and expected earnings of $7.00 on a per share and adjusted basis for the full fiscal 2025. The 24x figure aligns with the stock’s average P/E multiple over the last four years.
While PG stock looks appropriately priced, it is helpful to see how Procter & Gamble’s Peers fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.
Returns | Oct 2024 MTD [1] |
2024 YTD [1] |
2017-24 Total [2] |
PG Return | 0% | 20% | 154% |
S&P 500 Return | 1% | 22% | 160% |
Trefis Reinforced Value Portfolio | 3% | 18% | 791% |
[1] Returns as of 10/15/2024
[2] Cumulative total returns since the end of 2016
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