Key Stats for P&G Stock
- Current Price: $147.39
- Target Price (Mid): ~$205
- Street Target (mean): ~$161
- Potential Total Return: ~39%
- Annualized IRR: ~7% / year
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What Happened?
Procter & Gamble (PG) CFO Andre Schulten told investors on September 10 that he would give up 3 points of gross margin for 3 points of growth from the right innovation. He called gross margin “just an outcome” and said P&G will stay price-competitive. On guidance, he said: “I’m still confident that we are in the right range.”
The fiscal 2027 outlook assumed Brent around $90, and Brent closed at $103.08 on September 23 after Iran’s president vowed not to surrender to the U.S. P&G traded at $147.39 that day, 11.9% below its 52-week high of $167.25.
Schulten Would Trade Gross Margin for Growth While P&G Sharpens Prices
Asked about gross margin progression at the Barclays Global Consumer Staples Conference, Schulten said: “I shouldn’t say that I don’t care, but I really don’t.” He described a “fantastic innovation” that cost 3 points of gross margin and added 3 points of growth as “a trade-off we would make any given day.”
Schulten said P&G is now competitive on diaper prices and regained share there, has become competitive in Oral Care, and fixed club-channel price points in Family Care. He insisted price is “not the way we will grow.”
Conference host Lauren Lieberman said other companies had described P&G as more promotional over the summer. “It’s hard to say,” Schulten replied. He noted that in some cases, others may see P&G as leading, while P&G sees others leading. “We will be competitive. And if we’re not, we’ll make the right interventions.”
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Oil Above P&G’s $90 Assumption Tests That Trade
Schulten said the roughly $1 billion after-tax cost headwind in the outlook “was for Brent at $90,” against $102.50 that morning. He also cited a U.S. driver shortage and Canada’s retaliatory tariffs, which took effect September 8. He did not quantify the impact of either.
“We acknowledge the headwinds, but I think they’re manageable,” he said, citing “enough time and enough flexibility” to respond. He also warned that “the longer oil stays at above $100, the harder it will get.” And he said “the pressure on pricing will increase” if cost pressures persist. EBIT margin, per TIKR, already fell to 23.6% in fiscal 2026 from 24.3% a year earlier.
Analysts have grown more cautious. The Street’s mean target has fallen at each quarter-end since June 2025 and again as of September 23, from around $173 to around $161. Over that stretch, Buys dropped from 11 to 7, and Holds rose from 8 to 12. The current split is 7 Buys, 6 Outperforms, 12 Holds, no Underperforms, and no Sells, with one analyst holding no opinion.
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TIKR Advanced Model Analysis
- Current Price: $147.39
- Target Price (Mid): ~$205
- Potential Total Return: ~39%
- Annualized IRR: ~7% / year
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The mid case targets around $205 by June 30, 2031, about 4.8 years out. It assumes revenue growth of around 2.5% a year and net income margins near 19%, roughly fiscal 2026’s normalized level, so it needs no margin rebound.
Two drivers carry the revenue line. The first is U.S. consumption growth moving from about 2.5% toward the 3% to 4% Schulten says P&G needs. The second is China, which has grown five straight quarters and is “accelerating to mid-singles.”
Productivity and more efficient media spending drive the margin. The primary risk is a promotional fight that holds prices down while oil stays above P&G’s assumption.
U.S. growth of 3% to 4% would make the ~2.5% revenue assumption look conservative. Net margins below the model’s ~19% would pull the target under ~$205.
Conclusion
P&G’s fiscal first-quarter report, expected around October 22, is the first test. Analysts expect EPS of around $1.89, roughly 5% below last year’s $1.99. Asked about the 3-point fourth-quarter gap between North American shipments and consumption, Schulten said: “I don’t see that in the current quarter.”
A print near consensus, with the $6.89 to $7.11 core EPS range intact, would show the trade working with oil above plan. The next marker is December 31. Schulten expects P&G’s North America customer-brand scorecard to reach “80% plus by the end of the calendar year,” up from 50%. A guidance cut, or a stall well short of 80%, would mean P&G is paying for growth it has not yet received.
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Should You Invest in P&G?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
